Putin: Annual Press Conference

December 23, 2021

At the time of posting this is still ongoing.  Mr. Putin takes the podium at time marker 36:58 and proceeds directly to Q&A.  A transcript will be available but will take some time.

Update:  Completed after 3 hours and 56 minutes.  The president fielded the questions of 44 people, focusing on both domestic and international issues.

America Faces Supply-Chain Disruption and Shortages. Here’s Why

October 2, 2021

America Faces Supply-Chain Disruption and Shortages. Here’s Why

By Matt Stoller, The Guardian

There’s a quiet panic happening in the US economy. Medical labs are running out of supplies like pipettes and petri dishes, summer camps and restaurants are having trouble getting food, and automobile, paint and electronics firms are curtailing production because they can’t get semiconductors. One man told me he couldn’t get a Whopper meal at a Burger King in Florida, as there was a sign saying “Sorry, no French fries with any order. We have no potatoes.”

Imagine that, no French fries in America.

The problem seems to be getting worse, as the shortages pile on top of each other like a snake eating its tail. For instance, the inability to fix trucks means that truck drivers can’t haul boxes of goods, which might actually contain the parts needed to fix the trucks, and so forth.

There are multiple arguments about why the problem is as bad as it is. Everyone agrees that the COVID pandemic and chaotic changes in consumption habits have caused inevitable short-term price hikes and shortages. As people go on vacation less and do outdoor sports more, the price of, say, airline tickets should drop, and the price of bicycles will go up. But some point to government spending and money printing at the Fed as worsening the problem, while others suggest it is temporary and will resolve on its own.

Both arguments have merit. But what we’re experiencing is also the net result of decades of policy choices starting in the 1970s that emphasized consumer sovereignty over citizenship. The consolidation of power into the hands of private equity financiers and monopolists over the last four decades has left us uniquely unprepared to manage a supply shock. Our hyper-efficient globalized supply chain, once romanticized by men like Tom Friedman in The World Is Flat, is the problem. Like the financial system before the 2008 crash, this kind of economic order hides its fragility. It seems to work quite well, until it doesn’t.

The specific policies that led to our supply constrained world are lax antitrust, deregulation of basic infrastructure industries like shipping, railroads and trucking, disinvestment in domestic production, and trade policy emphasizing finance over manufacturing.

Take biopharmaceutical equipment necessary to make vaccines. There’s a shortage of fancy plastic bags that you mix chemicals in to make medicine, which isn’t surprising in a pandemic. But the reason for the shortage isn’t just COVID but a merger wave; over the last 15 years, four firms bought up the biopharmaceutical equipment industry, without any antitrust agency taking meaningful action. These firms now have market power, and dominate their competitors, by ensuring their bags can only interoperate with their specific mixing machines. It’s like not having enough Keurig coffee machine pods; the shortage isn’t the coffee, it’s the artificial bottleneck used to lock in customers.

Another example is railroads. Since deregulation in 1980, Wall Street consolidated 33 firms into just seven. And because the Surface Transportation Board lacks authority, Wall Street-owned railroads cut their workforce by 33% over the last six years, degrading our public shipping capacity. The Union Pacific closed a giant Chicago sorting facility in 2019; it now has so much backed up traffic that it suspended traffic from west coast ports.

Ocean shipping is the same. The 1997 Ocean Shipping Reform Act legalized secret rebates and led to a merger wave. The entire industry has now consolidated globally into three giant alliances that occasionally crash their too-big-to-sail ships into the side of the Suez canal.

Then there’s trucking. Talk to most businesspeople who make or move things and they will complain about the driver shortage. This too is a story of deregulation. In the 1970s, the end of public rate-setting forced trucking firms to compete against each other to offer lower shipping prices. The way they did this was by lowering pay to their drivers. Trucking on a firm-level became unpredictable and financially fragile, so for drivers schedules became unsustainable, even if the pay during boom times could be high. Today, even though pay is going up, the scheduling is crushing drivers. The result is a shortage of truckers.

There are more problems that strike at the heart of our economy. The most obvious is semiconductors. Production of high-end chips has gone offshore to east Asia because of deliberate policy to disinvest in the hard process of making things. In addition, the firm that now controls the industry, Taiwan Semiconductor, holds a near monopoly position with a substantial technological lead and a track record in the 1990s and early 2000s of dumping chips at below cost.

Fortunately, policymakers have noticed. The Federal Reserve’s most recent Beige Book, a report on the economy that is published eight times a year, mentions “shortage” 80 times, and the FTC commissioner, Rohit Chopra, recently pointed out that shortages are slowing the economic recovery. The chair of the Surface Transportation Board, Martin Oberman, noted that railroads stripping down their operations to please Wall Street resulted in container congestions at US ports, a significant chokepoint for imports. And Congress is on the verge of funding tens of billions of dollars to boost domestic semiconductor manufacturing.

Even business leaders are getting it. Chemical firms are asking regulators to act. And at last week’s Intermodal Association of North America’s Intermodal Expo, where representatives from the shipping, rail, ports and drayage industries spoke, one executive said, “Without fear of regulation, I don’t know what will motivate all stakeholders to be at the table.”

It is possible to fix our economy and our supply chains, if we choose to do so. Several times in the 20th century, Congress or the FTC undertook detailed studies of the firms in the economy. We need one of those again. At the same time, Congress should strengthen antitrust law, ban all large mergers, strictly control finance, and re-regulate our transportation industries.

Fundamentally, America has to move away from the goal of seeking cheap stuff made abroad for consumers in a low-wage economy. That means rearranging our hierarchies of power so finance, consulting and capital-light tech leaders became less important than people who know how to make things. The problem we have is shortages, so it’s time to put people in charge who value production.

The Current Status of Economy in Pakistan

The Current Status of Economy in Pakistan

June 03, 2021

By Zamir Awan for the Saker Blog

Official data released by the Government of Pakistan is encouraging very much. It shows an increase in foreign remittances, an increase in agri-produce, especially wheat, which is a staple food in Pakistan, and the GDP growth is projected at 3.9 percent, etc. All economic indicators seem satisfactory. If the data is accurate, we must congratulate the government and rank high achiever under COVID-19 era, whereas the global economy is in severe crisis.

However, public opinion is much different, and one can witness it when going to markets. The consumer products have a sharp rise in most commodities, especially the food and eatables prices have gone up. The items of daily use are also getting higher prices. Whereas the salaries are stagnant, there was no increase in wages since the PTI government came into power. Even the regular routine increments are halted. In the private sector, due to lockdowns, economic activities are also facing restrictions. There might be very few exceptions, but most people in Pakistan face low income or no increase in revenue. With limited and stagnant pay, meeting the sharp increase in inflation is not an easy task. People are tense and nervous.

The job market is almost halted; there are no new jobs in the Government sector, and the private sector is also not hiring because of limited business activities under COVID-19. However, the PTI government has made promises to create enormous new jobs but failed to meet its commitments. The creation of employment is directly related to GDP growth. With a population growth of 2 percent approximately, Pakistan can not afford new jobs with the meager GDP. However, Pakistani Universities are producing almost one and half million graduates every year, looking for jobs. The situation is rather vulnerable.

Internal and external debt is increasing, putting the nation in a much awkward situation. However, the exchange rate is stable for quite some time, which is appreciated.

Whatsoever is the official version, but the economic challenges are enormous multi-dimensional, including slower economic growth, rising unemployment, and poverty, massive fiscal deficit, growing public and external debts. However, these problems were inherited from previous few Governments like PP-Government from 2008-2013 and MPL-N Government from 2013-2018. But the current Government of PTI has not only failed to rectify but has aggregated to some extent.

PTI Government failed to improve the economic problems faced by the nation due to the incompetency of the economic team. The Finance Minister has been kept on changing on and off, which has damaged the political goodwill of PTI and may have lost public popularity already.

IMF has also played its role in worsening the situation. As a matter of fact, despite high claims by IMF, but failed all over the world to revive the economy globally. Most of the nation has suffered a bitter experience with IMF. Pakistan is no exception and believes that IMF has aggregated the problems instead of solving them.

Pakistan is a country blessed with abundant natural resources, mining and minerals are rich, and agriculture is one of our strengths. The population is around 220 million, with 70% of the population young under the age of 40. The huge, dynamic, diligent workforce is considered one of our strengths. A nuclear state, yet, so miserable economy, is beyond understanding. I believe it is mismanagement only; the real potential of Pakistan has not been exploited yet.

Pakistan has economists of international repute, trained by Nobel Laurents, like Dr. Ashfaq Hassan Khan. He has given a few recommendations to the Government of Pakistan recently published in the Business recorder:-

The IMF program had got suspended in Pakistan after the onslaught of Coronavirus in late February 2020. With the suspension of the IMF program came the suspension of hara-kiri attached with the program in raising electricity and gas prices, interest rate, and devaluation of the rupee. The interest rate was brought down from 13.25 percent to 7.0 percent in a few months; the exchange rate exhibited a modicum of stability and appreciated after the suspension of the IMF program; gas and electricity tariffs remained unchanged during the suspension. Such a suspension of the IMF program on account of Covid-19 brought tremendous positivity to Pakistan’s economy. It boosted the private sector’s confidence as they knew that utilities’ prices would remain unchanged, interest rates started declining. The government came forward to support businesses/industries and the poor segments of the country lavishly.

All these measures restored the confidence of the market and the private sector; the air of uncertainty was removed. The private sector moved forward, the credit off-take started rising, industrial activity was on the move, exports began gaining momentum, and the overall economy gained traction. All these were happening because of the suspension of the IMF program.

At the back of these developments, Pakistan has witnessed a surge in Covid-19 cases for the last two months. Business activities are being affected. The first thing that the government can do is to request the IMF for further suspension of the IMF program for a year and take this as an opportunity to revive the economy. Alternatively, Pakistan should renegotiate with the IMF and insist that there will be no more hike in the tariffs of electricity and gas, and the tax target for the FBR will be based on the ground realities of the economy. Pakistan should concentrate on wide-ranging reforms in the power sector (raising electricity prices is no reform; it is equivalent to maintain the status quo), tax system and tax administration reform, and reform in agriculture and industries. Reforms in the State Bank of Pakistan (SBP) law in the name of giving more autonomy as proposed by the IMF is like creating a state within the state, and therefore, must not be accepted. Unfortunately, IMF has been used to coerce other nations, and Pakistan is one such victim.

Secondly, the government must hold the hands of businesses at all levels—small, medium, and large. It is not the time to increase the cost of doing business by raising utility prices, interest rates and devaluing the currency. Furthermore, the SBP must consider reducing the policy rate to 5 percent from the current level of 7.0 percent in two/three monetary policy meetings, that is, by December 2021. It is abundantly clear that by raising the discount rate, we cannot reduce inflation in Pakistan.

Thirdly, agriculture has remained neglected by successive governments for nearly 13 years. Pakistan used to produce cotton in the range of 13-14 million bales until 2014-15. The production of cotton has nosedived to 6-7 million bales now. What went wrong in cotton production? The government must find the answer and take necessary corrective measures during the next fiscal year (2021-22).

Fourthly, wheat production in Pakistan had stagnated at 25 million tons from 2010-11 until this year (according to the government, the country has witnessed a record production of 27.3 million tons this year). Still, its population has been growing each year. Resultantly, the per capita availability of wheat per annum has declined from 145 kg to 120kg in 2019-20. The country’s wheat production has failed to maintain the pace of its population growth rate. Pakistan is fast heading towards acquiring a permanent wheat importing country and accordingly creating a food security issue for itself. Pakistan has entered into the second phase of the China-Pakistan Economic Corridor (CPEC), in which agriculture is a priority area. Pakistan must learn to enhance wheat and cotton production from China under the CPEC.

Fifthly, the small and medium enterprises (SMEs), construction, tourism, and IT sectors have strong potential to revive the economy and create enormous job opportunities because all these sectors are highly labor-intensive with high employment elasticity. These sectors are severely credit-constrained. These sectors should be provided credit directly through banking channels or the well-reputed NGOs. The government, on its part, must improve its physical infrastructure, for which budgetary allocation must be ensured.

Sixthly, the livestock and dairy sector accounts for 60.5 percent of agriculture and contributes 11.7 percent to GDP. This sector is almost equal to the large-scale manufacturing sector. Pakistan produces nearly 62 million tons of milk in a year. More than 8 million rural population derive their livelihoods from this sector. It is a highly labor-intensive sector and has enormous potential for creating jobs. The road to poverty alleviation in the rural area passes through the livestock and dairy sector, but it has remained neglected in Pakistan. The government may involve the private sector in the development of this sector to produce milk and dairy products to meet growing domestic and foreign demand.

Seventhly, in the second phase of the CPEC, besides agriculture, industrialization through the Special Economic Zones (SEZs) is yet another priority area where progress is much desired. The government must use CPEC as a vehicle for reviving economic activity to achieve 6 to 7 percent growth in the next four to five years. Let us resolve that during the fiscal year 2021-22, at least one SEZ will become functional.

Eighthly, Karachi being the growth and revenue engine of Pakistan, will play a pivotal role in reviving economic activity in the country and sustaining 5-7 percent growth on a sustained basis. “Give me peace and stability in Karachi, and I will give you the revenue,” this is a historic quote of a former Chairman of the FBR to a former Prime Minister of Pakistan in the mid-1990s. Peace and stability in Karachi and improved infrastructure and cleanliness of the city will go a long way in sustaining higher economic growth. The political situation in Karachi must be handled with political foresight inclusiveness, equal opportunities, and local government empowerment.

Summing UP: To revive economic activity and to achieve a growth rate of 5-6 or even 7 percent in the next four to five years on a sustained basis, Pakistan needs to do the following: i) either suspend the IMF program for a year or renegotiate the cruelest program ever given to Pakistan; ii) no more hike in utility prices (gas and electricity) there is a need to reduce the price of electricity as Pakistan has excess capacity; iii) use both fiscal and monetary policy to revive economic activity; iv) reduce the discount rate or policy rate to 5 percent in the next 2/3 monetary policy meetings; v) primary emphasis be given to agriculture and seeking Chinese assistance under the second phase of the CPEC; vii) SMEs, livestock and dairy sector, construction, tourism, and IT sectors should form the priority areas along with agriculture; viii) undertake wide-ranging reforms in agriculture, industry, energy, taxation, and governance; and ix) peace and stability and better infrastructure in Karachi are vital for economic recovery.

Author: Prof. Engr. Zamir Ahmed Awan, Sinologist (ex-Diplomat), Editor, Analyst, Non-Resident Fellow of CCG (Center for China and Globalization), National University of Sciences and Technology (NUST), Islamabad, Pakistan. (E-mail: awanzamir@yahoo.com).

Iranian Company Replaces China in South Pars Project: Minister

Iranian Company Replaces China in South Pars Project: Minister

October, 06, 2019 – 14:15

TEHRAN (Tasnim)

Iranian company PetroPars has taken over a project on development of phase 11 of the country’s South Pars gas field as a Chinese contractor dropped out of the project, oil minister announced.

Speaking to reporters on Sunday, Bijan Namdar Zanganeh said PetroPars has undertaken to carry out the unfinished project to develop phase 11 of South Pars gas field after the Chinese contractor left the project.

The Iranian company is going to install the first jacket (steel frame supporting the deck of a fixed offshore platform) in the phase 11 of South Pars to produce 500 million cubic feet of gas by March 2020, Zanganeh added.

In July 2017, French company Total signed a $1 billion deal to develop the South Pars gas field in cooperation with China National Petroleum Company (CNPC) and PetroPars.

But the French pulled out of the deal in May 2018 in light of a decision by US President Donald Trump to pull his country out of the 2015 Iran nuclear deal.

Later, the CNPC formally replaced Total in the project, but it suspended investment in Iran later in December 2018 in response to US pressures.

The investment halt followed four rounds of talks between Chinese officials and senior US authorities who urged CNPC to refrain from injecting fresh financing in Iran.

South Pars is the world’s largest gas field.

Top Economy stories

السقوط الكبير للاقتصاد على طريقة الحريريّة السياسية؟


أكتوبر 4, 2019

د. وفيق إبراهيم

ما يحدث في لبنان حالياً أكبر من أزمة اقتصادية عابرة، يمكن للنظام السياسي إيجاد حلول لها بالكثير من الدَّيْن، فالمزيد من الاقتراض يشبهُ في لبنان والبلدان التي على شاكلته، كبالعِ سُمّ مُحلّى ومفعوله القاتل بطيءٌ وتدريجيٌ وحاسم.

لذلك لا بدّ من الإشارة إلى تراجع نظرية التحشيد الطائفي والمذهبي والشعارات الوطنية والإقليمية أمام صعود الجوع وتفلّت جياعه بشكل غير مسبوق لم تعرفه بلاد الأرز منذ تشكّل دولتها في 1948. بما يعني اضمحلال نظرية جذب الناس باستحضار القدّيسين والأولياء والأئمة والأخطار الخارجية، فهؤلاء لا يتحمّلون عيارات فساد على النموذج اللبناني، أيّ الفساد السياسي والاقتصادي قاعدة الحكم الأساسية، فيما النزاهة استثناء طفيف.

لماذا يتفلّت الشارع؟

الاضطرابات التي شملت العاصمة ومدناً وقرى في الشمال والجنوب والبقاع هي عيّنة بسيطة للمقبل من الأحداث. فالتراجع الاقتصاديّ مستمرّ بمعدلات بطالة كارثية وتضخم قاتل، وسط غياب مرتفع جداً لخدمات الكهرباء والمياه العذبة ورفع النفايات المنتشرة في زوايا لبنان الذي يفترض أنه بلد سياحي.

هذه الاضطرابات لا تزال بسيطة وغريزية تعكس انسداداً كاملاً للآفاق أمام الشباب اللبناني الذي تضاعفت مصائبه الداخلية بالانقطاع شبه الكامل لإمكانية العمل في الخارج. فالخليج متوقف عن استقباله بنسب عالية جداً وكذلك أوروبا وكندا والولايات المتحدة الأميركية. ويُضاف التضييق المصرفي الكبير بقرار مقاطعة أميركي على حركة التحويلات، ما استتبع تراجعاً في تحويلات المغتربين اللبنانيين إلى ذويهم في الداخل بمعدلات عالية جداً.

كما أنّ الدعم الإقليمي للقوى السياسية في الداخل اللبناني مقطوع بدوره وينعكس تضييقاً على الدوائر الشعبيّة المستفيدة منه، ومجمل الحركة الاقتصادية في البلاد راكدة بيعاً وشراء، وإلا كيف نستوعب إقدام رئيس الحكومة سعد الحريري على إقفال تلفزيون المستقبل الخاصة والمعبّرة عن سياسة حزبه المستقبل واتجاهاته الإقليمية والدولية، ربطاً بما للإعلام من قدرات على التحشيد.

إنّ مجمل هذه العناصر المذكورة المرتبطة بفساد سياسي من النظام الطائفي الحاكم للبلاد ووكلائه في الإدارة والقضاء نهبت الاقتصاد اللبناني بقسمَيْه الخاص والعام مبدّدين الأملاك البحرية والعامة وعابثين بالجمارك والمرافئ والمعابر والمطارات والصفقات، فارضين عشرات آلاف الوظائف لأنصارهم في القطاع العام من دون أدنى حاجة إليهم مكرّسين الموالين اليهم قيادات في مواقعهم ما أدّى الى تعطيل الأعمال السليمة وتصاعد مفهوم الرشى من السريّة إلى العلنية من دون أيّ حياء أو مساءلة قانونيّة، حتى أنها أصبحت ضريبة إضافية يدفعها صاحب الحاجة من دون مساءلة أيضاً، ولم يعُد التشهير بسياسيّي لبنان في الإعلام ووسائل الاتصال الجماهيري يكفي لإيقاف فسادهم، لأنهم يعرفون أنّ بضعة أيام فقط على رواج الاتهامات كافية لكي ينساها الناس بغياب أدوات المتابعة الحزبية والجماهيرية.

هناك ملاحظة لا يجوز إغفالها وتتعلّق بإصرار قسم من الطبقة السياسية الحاكمة في لبنان على إغلاق الحدود مع سورية ومنع التعامل الاقتصادي معها مع الاكتفاء بمرور اجتماعي بسيط، وذلك تلبية لأوامر ارتباطاتها الدولية الأميركية والعربية من السعودية الذين أرادوا إسقاط نظامها السياسي. وهذا تسبّب إلى جانب فساد الحكام السياسيين بضرب قطاع الخدمات اللبناني وإضعاف السياحة ما أصاب نصف اللبنانيين تقريباً.

كيف وصل الوضع إلى هذا المستوى الإفقاري؟

تميّزت مرحلة المارونية السياسية العام 1948 وحتى بداية التسعينيات بولاء للغرب والخليج إنما على قاعدة فساد متدنّ وإنتاج إداري عالي المستوى، واهتمام مركّز على قطاع الخدمات والسياحة، وكانت الحدود السورية رئة الاقتصاد اللبناني، على الرغم من تبعيّة لبنان السياسيّة لدول لا تزال تعادي سورية حتى الآن.

هذا النمط السياسي المتدبّر انقلب رأساً على عقب مع وصول المرحوم رفيق الحريري الى رئاسة حكومة لبنان مدعوماً من ثلاثية أميركية سوريّة وسعودية، فحمل معه نمطاً شبه مستسلم يوالي فيه هذه التغطيات الداعمة بشكل مفتوح.

مقابل هذه التغطية انتزع الحريري ميزة إدارة الاقتصاد اللبناني بنظرية الإنماء بالدَّيْن على قطاعات غير منتجة وفي بلدٍ لا إنتاج فيه، وحين حذّره اقتصاديون موالون له من مخاطر هذه النظرية أجابهم بأنّ»السلام المقبل مع «إسرائيل» بإمكانه إعادة الازدهار إلى لبنان وتسديد كامل الديون».

لم يكتفِ «الشهيد» بهذه الحدود، ففتح أموال الدولة لإرضاء المحاور الشيعية والدرزية والمسيحية وإلحاقها بمشروعه، حتى أنه استعمل النفوذ الغربي لجذب القيادات الكنسيّة على شاكلة الكاردينال الراحل صفير.

هذا ما ضاعف من حجم الدين العام الى جانب استشراء حركة فساد أكملت على ما تبقى من أموال اللبنانيين، وواصل ورثته تطبيق طريقته السياسية الاقتصادية إنما مع شيء إضافي وهو التذرّع باندلاع الأزمة السورية، لإقفال العلاقات الاقتصادية مع دمشق والسماح لبعض أنواع الإرهاب باستخدام الشمال والمخيّمات مراكز لشحن الإرهابيين فكرياً ونقلهم لوجيستياً الى سورية. فكيف يمكن لبلد في حالة حرب داخلية مخيفة مثل سورية ان يؤمّن الكهرباء 24 ساعة يومياً، بانياً عبر شركات إيرانية شبكة كهربائية كاملة ويعمل على بناء أخرى فيما لبنان ينتج الكهرباء من استئجار بواخر تركية بمليارات الدولارات؟

وكيف تستطيع شركة سيمنس الألمانية بناء شبكة كهرباء في العراق بعام واحد ولبنان رفض عروضها مواصلاً استئجار البواخر؟

هذه هي الحريريّة السياسيّة من الأب الشهيد الى الابن المتّهم اليوم بإهداء راقصة جنوب أفريقية 16 مليون دولار دفعة واحدة.

يبدو أنّ البلاد تمرّ بمرحلة أفول الحريرية السياسية سياسياً واقتصادياً، لكن البديل فيها يحتاج لوقت كافٍ للتشكل. وكلّ الخشية أن لا تكون هذه المرحلة الانتقالية مرحلة اضطرابات شعبية عنيفة ومروّعة قد تستفيد منها فئات خارجية لإعادة الاقتتال الطائفي الى البلاد. فاحذروا أيّها السياسيون من مقبل الأيام، وذلك بالالتزام بسياسات تغيير جذرية تتطلب أولاً ما لا يمكن ان تفعلوه، وهو رحيلكم وتخلّيكم عن السلطة لمصلحة لبنان الجديد.

Occupy Down Town Beirut! Is Lebanon’s Economy Collapsing beyond Resuscitation?

Occupy Down Town Beirut! Is Lebanon’s Economy Collapsing beyond Resuscitation?

By Fatima Haydar – Beirut

Lebanon, the tiny Middle Eastern country on the Mediterranean Sea, is still recovering from a devastating civil war. Almost three decades had passed and Lebanon is still suffering from the consequences of that war which ended in 1990.

The economic situation in Lebanon is beyond repair; and the situation is getting even worse. Thanks to the dire economy, it is the third-highest indebted country in the world in terms of the ratio of debt-to-GDP.

Economist and Professor of Finance at the Lebanese University, Dr. Ali Awdeh, tackles the economic crisis in Lebanon in an interview with al-Ahed News.

“We are facing a real crisis which is being exaggerated by the complex political situation,” Dr. Awdeh said, adding that “this is not the first time Lebanon has faced such a crisis. Indeed, we have had more difficult times than what we are currently facing.”

He compared the economic situation in Lebanon prior and post 2000, “If we are talking about the budget deficit, the public debt, the trade deficit, or the Balance of Payments [BoP] deficit, sometime after the war between 2000 and 2002, then Lebanon has experienced worse times; though, there was no state of panic.”

“However, nowadays, the gravity of what makes people feel how bad the situation is, is that the political situation is worse and more complicated than before; the danger lies in the polarity of division among the parties and the depth of political differences; Not to mention, the problem posed by corruption, which has become more deeply rooted than it has been in the previous period,” Dr. Awdeh explained.

Meanwhile, the Lebanese economist explained that both the financial and monetary situations in the country are facing difficulties. Though, he clarified that the situation was not as bad as it seemed, “there is stability in the banking sector in general, and the monetary sector is also fairly stable.”

Conversely, the scarcity of US dollars is causing a crisis for Lebanese citizens and businesses. Yet, this scarcity is not “spontaneous”, as Dr. Awdeh puts it, explaining that the Central Bank was following “this policy of withdrawing US dollars from Lebanese markets to keep as much of the American currency in Lebanon. But at the same time, the Central Bank cannot control the circulation of dollars.”

Dr. Awdeh shed light on the crisis caused by the budget deficit, specifically the balance of payments and trade deficits. He said that “due to lack of sound financial decision, the financial policies set forth for the coming 20 or so years were not on the right track.”

According to Dr. Awdeh, the monetary policy was trying to fill in the gaps caused by the financial decision, though the former was unable to cover all of the latter’s aspects.

The economist stressed the need for a sound financial decision, which will pave the way for a less dependent economy. “It is a chain or a cycle, the first step being a sound financial decision-making and financial reforms; and thus, directing public finance into the right direction,” Dr. Awdeh clarified.

Furthermore, he tackled the policies of Bank of Lebanon [BDL] – the central bank of Lebanon – and its governor Riad Salameh, which had been in place since 1993, noting that financial and monetary policies should be “more pragmatic” – in other words, according to the economist, they should be more flexible – to change with the changing economic circumstances.

Dr. Awdeh focused on the positive and negative aspects of these policies. He spoke of currency exchange rates, interest rates and dollarization.

“The fixed currency exchange rate has had some positive aspects at first, as people had no confidence in the Lebanese pound,” he said, adding that this policy led to a state of stability in the exchange rate and a stability – to some extent – in inflation.

Regarding interests, Dr. Awdeh saw that it would have been much better if the Lebanese government followed a more flexible approach – one that would increase and decrease in accordance with economic developments.

The dollarization – according to Dr. Awdeh – was another failure in the policies of the BDL. He explained that the Lebanese economy “is very much dollarized and a large amount of deposits at the banks are in US dollars. As a result, a large part of the loans granted by banks are in US dollars.

He said that the BDL “could not solve this problem, so the economy remained dollarized while the exchange rate was constant.”

Nonetheless, the expert came to conclusion that many of the BDL’s policies and measures aimed to enhance the situation, but what happened was the opposite. He said the BDL should have paid attention to what he called “side effects”.

Though, Dr. Awdeh stressed the necessity on the part of the Lebanese government to take the necessary measures to deal with the crisis saying, “This is an extraordinary situation – a situation that required greater alert from the government”.

In a parallel notion, the economist related the economic situation in Lebanon to the regional and international arena. Dr. Awdeh believed that “it is no one’s interest – at home or abroad – that the economic situation in Lebanon collapses.”

He further added, “Regardless of whether they are [regional and international states] on our side or not, there are about 2 million Syrian refugees in Lebanon; and if the economy collapses, they will leave and become other countries’ burden.”

“So, no one has an interest in the significant deterioration of Lebanon’s economic situation,” Dr. Awdeh concluded.

ثلاثة توائم بين الوحدة والاستقلال والتفكك والانتداب

يوليو 24, 2019

البروفسور فريد البستاني

يتشكل من السياسة والاقتصاد والإدارة ثلاثة توائم تقوم عليها ركائز الدولة، ويؤدي النظر إلى حال كلّ منها إلى استخلاص حال الآخر، ويبدو الرهان على معالجة مشاكل أيّ منها دون معالجة مشاكل الآخر وهما، خصوصاً، عندما تكون المشاكل من النوع الذي يواجهه لبنان ذات طابع بنيوي، تحتاج إلى علاجات جذرية وقد تخطت مرحلة العلاجات الموضعيّة والمسكنات، وتصبح التوأمة أشد وضوحاً في المشكلة والعلاج عندما نتناول قدرة كل من مساحات السياسة والاقتصاد والإدارة على التماسك أو على ممارسة الاستقلال. وهما ركيزة أي قدرة على النهوض، ومصدر كل قوة، فبلا جسد متماسك لا قوة وبلا استقلال ولا قرار. ويبدو لنا مباشرة كيف يؤدي التفكك إلى إضعاف القرار المستقل واستدراج التدخلات، بينما يؤدي التماسك إلى حماية الاستقلال كشرط لحرية القرار.

في السياسة لا يمكن لأحد إنكار حقيقة حال الفدرلة التي تسيطر على تركيبة الدولة ولو بصورة غير معلنة، حيث التداخل بين الوطني والطائفي يقوم على تسوية عبر عنها اتفاق الطائف، ومن قبله الصيغة والميثاق، باعتبار التنظيم الطائفي للدولة ومؤسساتها مصدر الاطمئنان بين مكوّناتها، وبقدر ما أثبتت هذه المعادلة صحتها في تحقيق هذا الهدف، فقد منعت قيام دولة القانون الذي يتساوى الجميع أمامه، وفقاً لقاعدة المواطنة التي يقوم عليها كل قانون، والمواطنة لا تتعايش مع جعل العلاقة بين الدولة والمواطن تمرّ بوسيط هو الطائفة، التي يشكل الانتماء إليها مصدر اطمئنان في التوظيف والخدمات ويشكّل الاحتماء بها ملاذاً في الأزمات. وهذا النوع من الفدرالية غير المعلنة ينسحب بصورة مباشرة على كثير من أوجه الحياة السياسية فتصير كل مؤسسة عامة محسوبة على طائفة، ويصير قانون الانتخاب مكرّساً لتتويج زعامات للطوائف، وتتحول التعيينات في الوظائف الأساسية في الدولة محكومة بتوازنات طائفية ينتج عنها تحول ولاء الكثير من قادة هذه المؤسسات لزعماء طوائفهم أكثر من الولاء لهرمية الأداء المؤسسي في الدولة.

هذا التفكك السياسي الناتج عن الطائفية لا يعني أن إلغاءها هو الحل السحري في بلد يشعر كل من فيه أنه أقلية تعيش قلقاً وجودياً، في زمن صحوة الأقليات وتغلغل التطرّف في الأكثريات في منطقة تعصف بها رياح التفكك والعنف، وما تعنيه رؤية مخاطر التفكك اللاحق بالدولة بنتيجة التنظيم الطائفي القول بأن البحث يجب أن يبدأ من هنا، من كيفية الجمع بين الحاجة للطمأنينة التي يوفرها التنظيم الطائفي، والحاجة للمواطنة التي يحتاجها بناء الدولة، خصوصاً أن دولة الجماعات لا يمكن أن تكون مستقلة بقرارها وكل جماعة فيها تقيم علاقاتها بالخارج دون المرور بالدولة ومؤسساتها، وتستدرج هذا الخارج في لحظات الأزمات أملاً بزيادة المكاسب أو طلباً لتفادي الخسائر. فالدولة الوطنية هي دولة المواطنة، بعدما شهدنا ونشهد في دولة الطوائف ما نسمّيه بحروب الآخرين على أرضنا، وهي حروبنا نحن التي خضناها بأرزاقنا وأرواح أبنائنا وبدمائنا بوهم تحقيق انتصار هنا أو تجنّب هزيمة هناك. فالاستقلال والوحدة توأم كما التفكّك والتبعيّة توأم.

حال الاقتصاد يشبه كثيراً حال الدولة، حيث تتضخّم قطاعات وتضمر قطاعات ويفتقد جسد الاقتصاد والمال للتناسق والانسجام، فالضمور في القطاعات الاقتصادية الرئيسية التي يقوم عليها الازدهار يرافقه توسّع هائل في القطاع العام الذي تورم وتضخم بصورة عجائبية تفيض عن حاجة الدولة والاقتصاد، وعن قدرتهما على تأمين حاجات هذا القطاع، مقابل تدنٍّ هائل في مستوى الخدمات، وشكوى عامة من الفساد والفوضى والتسيّب، وبالتوازي نما قطاع المصارف بصورة شكلت مصدر ضمان للوضع المالي بقدراته المالية الكبيرة التي تعادل وحدها ثلاثة أضعاف حجم الاقتصاد الوطني، لكن الاقتصاد لا يستفيد إلا من نسبة ضئيلة من قدرات القطاع المصرفي المكرّسة بصورة رئيسيّة لخدمة دين الدولة وتمويل عجزها بفوائد مرتفعة لا يستطيع القطاع الاقتصادي الاستدانة بسقوفها العالية، بينما زادت موجودات مصرف لبنان وشكلت مصدر أمان لسعر صرف الليرة بحيث صارت تعادل وحدها كل حجم الاقتصاد، لكن في دولة ترزح تحت الديون، تبحث عن مصادر لتمويل عجزها، وسداد خدمة ديونها بديون جديدة. وهذا التفكك وفقدان الانسجام والتناسق بين مكونات العملية الاقتصادية والمالية وتفاعل مقدراتها وأجزائها، هو الأساس أيضاً في فقدان القرار المستقل في القدرة على معالجة أزماتنا الاقتصادية والمالية، فقد تحول الدين المتضخم إلى مصدر تأثير على الاستقلال المالي، حيث صار لبنان رهينة للخارج وقرار الخارج بنتيجة البحث عن ديون بفوائد منخفضة من جهة والوقوع في لوائح التصنيف الائتماني من جهة أخرى، التي تعدها المؤسسات المالية الدولية للدول التي تقع تحت عبء ديون كبيرة تتخطى حجم اقتصادها كحال لبنان.

أما في الإدارة، فقد تحولت المؤسسات التي بنيت في أواخر الخمسينيات وأوائل الستينيات من القرن الماضي، إلى أطر عاجزة عن استيعاب تغير الحاجات التي فرضها تطور الخدمات والاقتصاد والحاجات الجديدة، وبدلاً من صياغة هيكلية عصرية للإدارة، نشأت بنى وهياكل عشوائية وفوضوية، لا يجمعها رابط وكثير منها لا يخضع لأي نوع من الرقابة المالية والإدارية فتحوّلت إلى جزر متباعدة متنافرة تشبه فدرالية الطوائف التي تحكم السياسة، وصار التوظيف من خارج القانون أمراً عادياً، وتغلغل فيها الفساد حتى نخرها كالسوس، وكما شكّل التفكك سبباً للتبعية في السياسة والاقتصاد تحول التفكك في الإدارة إلى مدخل لمرجعيات بديلة للمرجعية الهرمية الطبيعية، وصارت المؤسسات الإدارية شكلاً ظاهرياً لدولة وامتداداً عميقاً للفدرالية غير المعلنة بين مرجعيات الطوائف.

الحقيقة الصعبة التي بات علينا إدراكها هي أنه بقدر ما نحقق من الوحدة نحقق من الاستقلال في قراراتنا، وبقدر ما تبدو الوحدة مرتبطة بإزالة الفوارق بين الطوائف والمؤسسات الإدارية والقطاعات الاقتصادية، تبدو إزالة الفوارق بصورة كاملة مخاطرة مستحيلة في ظل الخصوصيات التي تدفع بكل مكونات المجتمع كما الاقتصاد كما الإدارة، إلى التمسك بما تعتبره مكاسبها الخاصة أو ما تسمّيه بخصوصياتها وتصنع لها نظريات تناسب الدعوة لعدم المساس بها، واعتبار أي اقتراب منها تهديداً وجودياً يثير القلق والخوف والذعر، ولأن الحلول المستدامة هي حلول تنتج بالوعي والتوافق فإن الحل المتوازن بين الخصوصيات والحاجة للوحدة، يجب أن يأتي رضائياً بين الطوائف وبين قطاعات الاقتصاد ومكوّنات الإدارة، بنتيجة الاقتناع باستحالة الاستمرار على ما كانت عليه الحال من قبل، ما يعني الحاجة لحوار صادق على كل المستويات، يجيب عن سؤال حول طبيعة الحدود التي لا تضرّ من الخصوصيات فيحافظ عليها، وعن نوعية الفوارق الضارة فيزيلها، ليحقق مقداراً من الوحدة والاستقلال هو الحاجة الضرورية لبناء الدولة، ويحتمل درجة من التمايزات والخصوصيات تؤمن الاطمئنان والرضا، فيتقبل ما يترتب على هذه الخصوصيات من تفاعل مع الخارج ليس ممكناً تفاديه في زمن بات العالم كله يتأثر ويؤثر ببعضه بعضاً سياسياً واقتصادياً، وتتوسع فيه الروابط بين الجماعات الطائفية والعرقية والأتنية عبر الحدود، وبين مرجعياتها ومكوناتها داخل الحدود، لكن دون تهديد سيادة الدول وهرمية مؤسساتها.

نائب الشوف في مجلس النواب اللبناني.

One country, two sessions, multiple tweaks


One country, two sessions, multiple tweaks

March 07, 2019

by Pepe Escobar (cross-posted with the Asia Times by special agreement with the author)

Contrary to Western doom and gloom interpretations, China’s two sessions now taking place in Beijing offer a fascinating mix of realpolitik and soft power. Every year, the two sessions involve the National People’s Congress (NPC) – the legislative body – and the Chinese People’s Political Consultative Conference (CPPCC) – the political advisory body – laying down the Chinese equivalent of the state of the union.

Premier Li Keqiang’s report acknowledged that Beijing foresees “graver and more complex” risks and “both predictable and unpredictable” challenges, with the conclusion that  China must be “prepared to fight tough battles” in 2019. It was undiluted realpolitik.

An economic growth target in the range of 6.0% to 6.5% is still massive in terms of the expansion of global capitalism – irrespective of the usual suspects carping on about China “stalling” or mired “in deep crisis.”

A deficit-to-GDP ratio set at 2.8% – slightly higher than the 2.6% last year – is not exactly a problem for such a huge economy.

What’s quite intriguing is how “Made in China 2025” – the full designation – simply vanished from the 2019 Government Work Report.

Yet the policy remains – transmuted in the report on the expansion of “smart plus.” By extending tax cuts for manufacturers and small-business taxpayers, Beijing will keep driving no holds barred toward what Li defined as “building up a powerful manufacturing country” – from industrial development to tech innovation.

Prosperity, Sun Tzu-style

The Sun Tzu tweak is that Beijing will tone down promoting the Made in China 2025 drive in public. Yes, the Chinese are learning soft-power techniques – fast.

Beijing’s top targets remain, well, on target; to lift 30 million rural residents from poverty and to double per capita income by next year from a decade earlier, thus arriving at the cherished status of “moderately prosperous society.” By any measure, this is a groundbreaking achievement of historic proportions.

It’s virtually impossible for the West to understand the intricacies of how decisions are made in China. First you consult – broadly, vertically and horizontally. Then you reach a – strategic – consensus. The results are firmly set in annual meetings such as the two sessions and in detailed five-year plans.

The New Silk Roads, or Belt and Road Initiative (BRI), are broadly planned all the way to 2049. We are still in the planning stage – implementation, officially, has not even started.

In parallel, geopolitical and geo-economic twists and turns are addressed by constant tweaks and tactical adjustments. That’s the “prepared to fight tough battles” emphasis on Li’s report.

And here lies the challenge posed by the Deng Xiaoping–conceived Chinese system to the mud wrestling of Western democracy. Terminology is irrelevant; call it “socialist democracy” with Chinese characteristics, what matters is if it works. For China.

Terminology actually matters – but only in a Chinese context. Take for instance dixian siwei – which can be loosely translated as grassroots thinking. You hold on to what you have, and rest on a solid foundation, and you stay “sober and strategically focused” when facing new challenges, in the words of President Xi Jinping, who has been using the concept widely. The concept is actually an upgrade of Deng’s “crossing the river while feeling the stones.”

From a Western point of view, what may be open to wide debate is the basis of the concept: “To fully adhere to the party’s political line.” Well, for better or for worse, there’s no other line in the market in terms of 21st-century China. Call it “keep calm and carry on” with Chinese characteristics.

‘Smart plus’ meets BRI

The very few informed China analysts with a Western background, such as Andy Rothman, are adamant: China won’t “collapse” any time soon. Rothman makes a pretty straightforward case: China has already structurally changed, a swift process that crystalized last year.

In a nutshell, economic growth is now driven by consumption, the economy is becoming less and less dependent on exports, and there’s no more pre-eminence of state investment.

And that leads us to the external vectors – and the role of BRI.

This is to a large extent a China goes West strategy. That’s how Beijing has conceptually framed this massive connectivity drive – increased connectivity across the Global South shields emerging markets everywhere from shocks provoked by what can only be construed as Western instability.

Minxin Pei, who now holds the chair in US-China relations at the Kluge Center of the Library of Congress, is among those accusing the BRI of sliding “into obscurity.”

Yet it’s not a question of “taking money away from Chinese pensioners to build a road to nowhere in a distant land,” as Pei wrote in the Nikkei Asian Review. It’s about BRI as the international partner of Made in China 2025.

And it’s about Beijing offering a unique path, for instance to Central Asian and Southeast Asian neighbors – the BRI as a framework for long-term sustainable development, and mixing industrial, agricultural and hybrid economic models.

And that explains why Beijing is becoming responsive to reconfiguring BRI projects in Malaysia, Myanmar, Pakistan or Sri Lanka.

Once again, it’s dixian siwei on the move. It’s as if Team Xi have been listening, softly, to that famous closed-door speech in September last year by Deng Pufang, Deng Xiaoping’s son. He urged China to “know its place” and not be “overbearing.” That is now translating into “keep calm and carry a ‘smart plus’ strategy.”

Russia Slides Towards Internal Political Crisis (MUST SEE SouthFront video report!)


February 26, 2019

Saker note: a rather harsh criticism of the Russian Government and the Kremlin in this SouthFront analysis.  Sadly, I cannot say that I disagree with what they say.  In fact, I think that they are spot on and that all the “loyal” Kremlin-bots who deny that there is a serious problem in Russia are wrong.  Supporting Vladimir Putin’s struggle to truly make Russia sovereign again and built a new multi-polar world does not at all entail being blind to all the very real mistakes and even faults of the Russian government.  I can only say that I hope that SF is right and that the current lack of support of the Russian people of the government’s neo-liberal/capitalist policies will force Putin to correct the course and return to the kind of social policies the Russian people clearly want.  It is also high time for Russia to take a harsher stance on the Ukraine, if only because the situation in the Ukraine (political and economic) is a total disaster and because some kind of military escalation in the Ukraine seems inevitable.  All in all, yet another absolutely superb report by SouthFront who sober analysis contrasts favorably with what both flag-wavers and fear-mongers typically produce.



This is a critical look at the situation in Russia. The video is based on an article of one of our readers and additional data.

The Russia of 2019 is in a complicated economic and even political situation. Smoldering conflicts near its borders amid continued pressure from the US and NATO affect the situation in the country negatively. This is manifested in society and in national politics. The approval rating of the Russian government and personally of President Vladimir Putin has been decreasing.

According to VCIOM, a state pollster, in January 2019, Putin’s confidence rating was only 32.8%. This is 24% less than in January 2018 when it was 57.2%. At the same time, the confidence rating of Prime Minister Dmitry Medvedev was 7.8%. The approval rating of his cabinet is 37.7% while the disapproval rating is 38.7%. Opposition sources show data, which is far worse for the current Russian leadership.

This tendency is not linked to the foreign policy course of the Kremlin. Rather, it’s the result of the recent series of liberal-minded economic reforms, which look similar to the approaches exercised by the Russian government in the mid-1990s. The decision to increase Value Added Tax amid the slowing Russian economy, especially in the industrial sector, and a very unpopular pension reform increasing the retirement age were both factors contributing to the further growth of discontent in the population.

Russia’s GDP increased by 2.3% in 2018 compared to 1.6% in 2017. However, the Ministry of Economic Development, in its document entitled “Economic Picture” stated that this is linked to “one-time factors” and is not “stable”. The ministry maintained its earlier forecast stating that GDP growth in 2019 will be 1.3%. It confirmed increasing capital outflow. In this case, the repayment of funds to Western creditors by the Russian private sector is one of the causes.

The Ministry of Economic Development also pointed out that the expendable income of the population decreased by 0.2%. Statutory charges, including the increased taxes, are named as one of the reasons. The document says that statutory charges grew by 14.8% in 2018.

Additionally, the population is facing an increasingly restrictive administrative pressure: new fines and other penalties for minor violations in various fields and additional administrative restrictions limiting the freedom of actions of citizens. Restrictive traffic management of big cities, increasing fees for using federal highways as well as policies that are de-facto aimed at small business and self-employed persons are among its landmarks.

Meanwhile the general population has no effective levers of pressure to affect or correct government policy. The public political sphere has become a desert. United Russia (Edinaya Rossiya) is the only political party still de—facto existing in public politics. By now its ideological and organizational capabilities have become exhausted. Other “political parties and organizations” are just media constructs designed to defend the interests of a narrow group of their sponsors. It is hard to find a lawmaker in the State Duma or the Federation Council, who is not affiliated with the cliquish top political elite and oligarch clans.

In the media sphere, the government has failed to explain its current course to the population. A vast majority of the initiatives of Medvedev’s cabinet face a negative reaction from the population. A spate of scandals involving high and middle level government officials made the situation even worse. These cases revealed blatant hypocrisy and the neglectful attitude to duties of some Russian officials.

Some of the officials even became heroes of nationwide memes. Probably, the most prominent of these heroes are Minister of Labour and Employment of the Saratov region Natalia Sokolova and Head of Department for Youth Policy in the Sverdlov Region Olga Glatskikh.

Sokolova advised Russian pensioners to eat “makaroshki” [a derogatory term for maccheroni] to save money and to thus become able to survive on the subsistence minimum of 3,500 RUB [about 50 USD] per month.

“You will become younger, prettier and slimmer! Makaroshki cost is always the same!”, she said during a meeting of the regional parliamentary group on social policy in October 2018 adding that discounted products can be used to create a “balanced, but dietic” menu.

Glatskikh became a meme hero thank to her meeting with young volunteers during the same month. Commenting on the possible financing of youth projects, she told volunteers that the government did not ask their parents “to give birth” to them. So, they should expect nothing from the state.

In the period from 2018 to 2019, there were multiple arrests of officials caught exceeding the limits of their authority and being involved in corruption schemes. In comparison to previous periods, this number had increased by 1.5-2 times. The most recent detention took place right in the Parliament building on January 30. A 32-year-old senator, Rauf Arashukov, is suspected of being a member of a criminal group involved in the 2010 murders of two people and in pressuring a witness to one of the killings. On the same day, authorities detained his father, an adviser to the chief executive of a Gazprom subsidiary, Raul Arashukov. He is suspected of embezzling natural gas worth 30 billion rubles ($450 million).

However, these actions do not appear to be enough to change the established media situation. After a large-scale corruption scandal in the Ministry of Defense in 2012, which led to almost no consequences for key responsible persons including former Defense Minister Anatoly Serdyukov, who even continued his carrier in state-linked corporation Rostec. The general public has serious reservations about any real success of anti-corruption efforts.

The aforementioned factors fuel the negative perception of the Medvedev government and Vladimir Putin as the head of state among Russian citizens.

The 2014 events in Crimea showed to the Russian population that its state is ready to defend the interests of the nation and those who describe themselves as Russians even by force of arms. This was the first case when this approach was openly employed in the recent history of Russia. Therefore, the population was enthusiastic and national pride was on the rise. However, the Kremlin failed to exploit these gained opportunities and did not use them to strengthen the Russian state. In fact, up to February 2019, the policy towards eastern Ukraine has been inconsistent. At the same time, Moscow continues to lose its influence in post-Soviet states. This can be observed in both the Caucasus and Central Asia. Even, their close ally, Belarus, occasionally demonstrates unfriendly behavior and focuses its own efforts on the exploitation of economic preferences granted by Russia.

Evaluating the current internal political situation in Russia and its foreign policy course, it’s possible to say that the Russian leadership has lost its clear vision of national development and a firm and consistent policy, which are needed for any great power. Another explanation of this is that the Russian leadership is facing pressure from multiple agents of influence, which stand against vision of a powerful independent state seeking to act as one of the centers of power on the global stage. One more factor, often pointed out by experts, is the closed crony-caste system of elites. This system led to the creation of a leadership, which pursues its own narrow clannish interests. Apparently, all of these factors influence Russian foreign and domestic policies in one way or another.

The aforementioned large-scale anti-corruption campaign, regarding the people’s show-me attitude towards its result, could be a sign of a new emerging trend, which would lead to a purge of the corrupt elites and to strategic changes in Russian domestic policy.

It is highly likely that Russia will face hard times in the next two years (2019-2020) and face various threats and challenges to its economy, foreign policy course and even to its statehood.

Imran Khan’s “Socialist Revolution” in Pakistan

Global Research, February 20, 2019

In order to assess the prospects of Imran Khan’s Pakistan Movement for Justice (Pakistan Tehreek-e-Insaf) as a political institution, we need to study its composition. With the benefit of hindsight, it seems the worst decision Pakistan’s former Prime Minister Nawaz Sharif took in his political career after returning from exile in November 2007 was his refusal to accept Musharraf-allied Pakistan Muslim League-Quaid (PML-Q) defectors back into the folds of Pakistan Muslim League-Nawaz (PML-N).

After that show of moral uprightness in the essentially unprincipled realpolitik of Pakistan, the cronies of Pakistan’s former dictator General Pervez Musharraf joined Imran Khan’s Pakistan Movement for Justice in droves and gave birth to a third nation-wide political force in Pakistan besides Pakistan Muslim League-Nawaz (PML-N) and Pakistan People’s Party (PPP).

If we take a cursory look at the Pakistan Movement for Justice’s membership, it is a hodgepodge of electable politicians from various political parties, but most of all from the former stalwarts of the Musharraf-allied Pakistan Muslim League-Quaid (PML-Q).

Here is a list of a few names who were previously the acolytes of General Pervez Musharraf and are now the ‘untainted’ leaders of Imran Khan’s Pakistan Movement for Justice which has launched a nation-wide crusade against corruption in Pakistan: Jahangir Tareen, a billionaire businessman who was formerly a minister in General Musharraf’s cabinet; Sheikh Rasheed, although he has not formally joined Imran Khan’s political party, he has become closer to Imran Khan than any other leader except Imran Khan’s virtual sidekick, Jahangir Tareen, and has been appointed minister for railways in Imran Khan’s cabinet; and Shah Mehmood Qureshi, a former stalwart of Pakistan People’s Party who served as Pakistan’s foreign minister from 2008 to 2011 until he was disgracefully forced to resign after the Raymond Davis affair and the US Navy Seals operation in Abbottabad in 2011 in which Osama bin Laden was killed, though he has once again been appointed foreign minister in Imran Khan’s new cabinet last year.

I would implore the readers to allow me to scribble a tongue-in-cheek rant here on Imran Khan’s “Naya Pakistan (New Pakistan) Revolution”: This struggle for revolution isn’t the first of its kind in Pakistan and it won’t be the last. The first such “socialist revolution” took place back in 1953 against the unjust status quo of Pakistan’s slain Prime Minister Liaquat Ali Khan and Khawaja Nazimuddin’s Muslim League.

The revolutionary heroes of yore, Ghulam Muhammad, Iskander Mirza and General Ayub Khan, laid the foundations of the “dictatorship of the proletariat” in Pakistan. The first lasted from 1958 to 1971, and its outcome was the massacre of hundreds of thousands of Bangladeshis and the separation of East Pakistan.

The second such “socialist revolution” occurred against the “elected dictatorship” of Prime Minister Zulfikar Ali Bhutto in 1977 and the “revolutionary messiah,” General Zia-ul-Haq, ruled Pakistan from 1977 to 1988 with an iron hand. After sufficiently consolidating the gains of the “revolution” in Pakistan, he also exported the “revolution” throughout the Af-Pak region.

The immediate outcome of the “revolution” was the destabilization of the whole region. It spawned many tadpole “revolutionaries” whose names we now hear in the news every day, such as the Taliban, the Haqqanis, Jaish-e-Muhammad and Lashkar-e-Taiba.

The last such “Marxist-Leninist revolution” took place against the “monopoly capitalism” and “corrupt cronyism” of Benazir Bhutto’s People’s Party and Nawaz Sharif’s Muslim League in 1999.

On a serious note, however, the reason why Imran Khan is desperate now is that despite forming the provincial government and ruling the northwestern Khyber-Pakhtunkhwa province for five years from 2013 to 2018 and then forming the government in the center last year, he has no tangible achievements to show. Criticizing the government from opposition benches and making electoral promises is always easy, but showing visible improvement in the affairs of governance is a hard sell.

The electoral pledges of cracking down on corruption and doing away with bureaucratic red-tape might earn him a few brownie points in front of his immature audience, but to treat the malady of corruption, we must first accurately identify the root causes of corruption. Corruption and economy are inter-linked. The governments of prosperous, developed countries can afford to pay adequate salaries to their public servants; and if public servants are paid well, then they don’t have the incentive to be corrupt.

There are two types of corruption: need-based corruption and greed-based corruption. Need-based corruption is the kind of corruption in which a poor police constable, who has a large family to support, earns a meager salary; he then augments his salary by taking bribes to make ends meet. I am not justifying his crime, but only describing the factual position.

Whereas the instance of greed-based corruption, which is often legitimized, is the corporate exploitation of resources and workforce by behemoth multinational corporations whose wealth is measured in hundreds of billions of dollars, far more than the total size of the economies of developing countries.

After establishing the fact that corruption and economy are inter-linked, we need to ask Prime Minister Imran Khan what is his economic vision to improve Pakistan’s economy, and on what basis does he claim to improve the economy on a nation-wide scale when he failed to make any visible improvement in Khyber-Pakhtunkhwa province during the Pakistan Movement for Justice’s five-year rule in the province from 2013 to 2018?

Finally, Pakistan Muslim League-Nawaz (PML-N) and Pakistan People’s Party (PPP) are the experienced political parties in Pakistan. They learned their lesson from the politics of confrontation during the 1990s that Pakistan’s military establishment employs the Machiavellian divide-and-conquer tactic of hobnobbing with weaker political parties against stronger political forces in order to disrupt the democratic process and maintain the establishment’s stranglehold on its traditional domain, the security and defense policy of Pakistan.

The new entrant in Pakistan’s political landscape, Imran Khan’s Pakistan Movement for Justice, will also learn this lesson after paying the price of colluding with the establishment, but by then, it might be too late.


Note to readers: please click the share buttons below. Forward this article to your email lists. Crosspost on your blog site, internet forums. etc.

Nauman Sadiq is an Islamabad-based attorney, columnist and geopolitical analyst focused on the politics of Af-Pak and the Middle East regions, neocolonialism and petro-imperialism. He is a frequent contributor to Global Research.

Civil War Coming to America?

February 12, 2019


Saker interview with Michael Hudson on Venezuela, February 7, 2019

February 06, 2019

[This interview was made for the Unz review]Saker interview with Michael Hudson on Venezuela, February 7, 2019

Introduction: There is a great deal of controversy about the true shape of the Venezuelan economy and whether Hugo Chavez’ and Nicholas Maduro’s reform and policies were crucial for the people of Venezuela or whether they were completely misguided and precipitated the current crises.  Anybody and everybody seems to have very strong held views about this.  But I don’t simply because I lack the expertise to have any such opinions.  So I decided to ask one of the most respected independent economists out there, Michael Hudson, for whom I have immense respect and whose analyses (including those he co-authored with Paul Craig Roberts) seem to be the most credible and honest ones you can find.  In fact, Paul Craig Roberts considers Hudson the “best economist in the world“!
I am deeply grateful to Michael for his replies which, I hope, will contribute to a honest and objective understanding of what really is taking place in Venezuela.
The Saker

The Saker: Could you summarize the state of Venezuela’s economy when Chavez came to power?

Michael Hudson: Venezuela was an oil monoculture. Its export revenue was spent largely on importing food and other necessities that it could have produced at home. Its trade was largely with the United States. So despite its oil wealth, it ran up foreign debt.

From the outset, U.S. oil companies have feared that Venezuela might someday use its oil revenues to benefit its overall population instead of letting the U.S. oil industry and its local comprador aristocracy siphon off its wealth. So the oil industry – backed by U.S. diplomacy – held Venezuela hostage in two ways.

First of all, oil refineries were not built in Venezuela, but in Trinidad and in the southern U.S. Gulf Coast states. This enabled U.S. oil companies – or the U.S. Government – to leave Venezuela without a means of “going it alone” and pursuing an independent policy with its oil, as it needed to have this oil refined. It doesn’t help to have oil reserves if you are unable to get this oil refined so as to be usable.

Second, Venezuela’s central bankers were persuaded to pledge their oil reserves and all assets of the state oil sector (including Citgo) as collateral for its foreign debt. This meant that if Venezuela defaulted (or was forced into default by U.S. banks refusing to make timely payment on its foreign debt), bondholders and U.S. oil majors would be in a legal position to take possession of Venezuelan oil assets.

These pro-U.S. policies made Venezuela a typically polarized Latin American oligarchy. Despite being nominally rich in oil revenue, its wealth was concentrated in the hands of a pro-U.S. oligarchy that let its domestic development be steered by the World Bank and IMF. The indigenous population, especially its rural racial minority as well as the urban underclass, was excluded from sharing in the country’s oil wealth. The oligarchy’s arrogant refusal to share the wealth, or even to make Venezuela self-sufficient in essentials, made the election of Hugo Chavez a natural outcome.

The Saker: Could you outline the various reforms and changes introduced by Hugo Chavez? What did he do right, and what did he do wrong?

Michael Hudson: Chavez sought to restore a mixed economy to Venezuela, using its government revenue – mainly from oil, of course – to develop infrastructure and domestic spending on health care, education, employment to raise living standards and productivity for his electoral constituency.

What he was unable to do was to clean up the embezzlement and built-in rake-off of income from the oil sector. And he was unable to stem the capital flight of the oligarchy, taking its wealth and moving it abroad – while running away themselves.

This was not “wrong”. It merely takes a long time to change an economy’s disruption – while the U.S. is using sanctions and “dirty tricks” to stop that process.

The Saker: What are, in your opinion, the causes of the current economic crisis in Venezuela – is it primarily due to mistakes by Chavez and Maduro or is the main cause US sabotage, subversion and sanctions?

Michael Hudson: There is no way that’s Chavez and Maduro could have pursued a pro-Venezuelan policy aimed at achieving economic independence without inciting fury, subversion and sanctions from the United States. American foreign policy remains as focused on oil as it was when it invaded Iraq under Dick Cheney’s regime. U.S. policy is to treat Venezuela as an extension of the U.S. economy, running a trade surplus in oil to spend in the United States or transfer its savings to U.S. banks.

By imposing sanctions that prevent Venezuela from gaining access to its U.S. bank deposits and the assets of its state-owned Citco, the United States is making it impossible for Venezuela to pay its foreign debt. This is forcing it into default, which U.S. diplomats hope to use as an excuse to foreclose on Venezuela’s oil resources and seize its foreign assets much as Paul Singer hedge fund sought to do with Argentina’s foreign assets.

Just as U.S. policy under Kissinger was to make Chile’s “economy scream,” so the U.S. is following the same path against Venezuela. It is using that country as a “demonstration effect” to warn other countries not to act in their self-interest in any way that prevents their economic surplus from being siphoned off by U.S. investors.

The Saker: What in your opinion should Maduro do next (assuming he stays in power and the USA does not overthrow him) to rescue the Venezuelan economy?

Michael Hudson: I cannot think of anything that President Maduro can do that he is not doing. At best, he can seek foreign support – and demonstrate to the world the need for an alternative international financial and economic system.

He already has begun to do this by trying to withdraw Venezuela’s gold from the Bank of England and Federal Reserve. This is turning into “asymmetrical warfare,” threatening what to de-sanctify the dollar standard in international finance. The refusal of England and the United States to grant an elected government control of its foreign assets demonstrates to the entire world that U.S. diplomats and courts alone can and will control foreign countries as an extension of U.S. nationalism.

The price of the U.S. economic attack on Venezuela is thus to fracture the global monetary system. Maduro’s defensive move is showing other countries the need to protect themselves from becoming “another Venezuela” by finding a new safe haven and paying agent for their gold, foreign exchange reserves and foreign debt financing, away from the dollar, sterling and euro areas.

The only way that Maduro can fight successfully is on the institutional level, upping the ante to move “outside the box.” His plan – and of course it is a longer-term plan – is to help catalyze a new international economic order independent of the U.S. dollar standard. It will work in the short run only if the United States believes that it can emerge from this fight as an honest financial broker, honest banking system and supporter of democratically elected regimes. The Trump administration is destroying illusion more thoroughly than any anti-imperialist critic or economic rival could do!

Over the longer run, Maduro also must develop Venezuelan agriculture, along much the same lines that the United States protected and developed its agriculture under the New Deal legislation of the 1930s – rural extension services, rural credit, seed advice, state marketing organizations for crop purchase and supply of mechanization, and the same kind of price supports that the United States has long used to subsidize domestic farm investment to increase productivity.

The Saker: What about the plan to introduce a oil-based crypto currency? Will that be an effective alternative to the dying Venezuelan Bolivar?

Michael Hudson: Only a national government can issue a currency. A “crypto” currency tied to the price of oil would become a hedging vehicle, prone to manipulation and price swings by forward sellers and buyers. A national currency must be based on the ability to tax, and Venezuela’s main tax source is oil revenue, which is being blocked from the United States. So Venezuela’s position is like that of the German mark coming out of its hyperinflation of the early 1920s. The only solution involves balance-of-payments support. It looks like the only such support will come from outside the dollar sphere.

The solution to any hyperinflation must be negotiated diplomatically and be supported by other governments. My history of international trade and financial theory, Trade, Develpoment and Foreign Debt, describes the German reparations problem and how its hyperinflation was solved by the Rentenmark.

Venezuela’s economic-rent tax would fall on oil, and luxury real estate sites, as well as monopoly prices, and on high incomes (mainly financial and monopoly income). This requires a logic to frame such tax and monetary policy. I have tried to explain how to achieve monetary and hence political independence for the past half-century. China is applying such policy most effectively. It is able to do so because it is a large and self-sufficient economy in essentials, running a large enough export surplus to pay for its food imports. Venezuela is in no such position. That is why it is looking to China for support at this time.

The Saker: How much assistance do China, Russia and Iran provide and how much can they do to help?  Do you think that these three countries together can help counter-act US sabotage, subversion and sanctions?

Michael Hudson: None of these countries have a current capacity to refine Venezuelan oil. This makes it difficult for them to take payment in Venezuelan oil. Only a long-term supply contract (paid for in advance) would be workable. And even in that case, what would China and Russia do if the United States simply grabbed their property in Venezuela, or refused to let Russia’s oil company take possession of Citco? In that case, the only response would be to seize U.S. investments in their own country as compensation.

At least China and Russia can provide an alternative bank clearing mechanism to SWIFT, so that Venezuela can by pass the U.S. financial system and keep its assets from being grabbed at will by U.S. authorities or bondholders. And of course, they can provide safe-keeping for however much of Venezuela’s gold it can get back from New York and London.

Looking ahead, therefore, China, Russia, Iran and other countries need to set up a new international court to adjudicate the coming diplomatic crisis and its financial and military consequences. Such a court – and its associated international bank as an alternative to the U.S.-controlled IMF and World Bank – needs a clear ideology to frame a set of principles of nationhood and international rights with power to implement and enforce its judgments.

This would confront U.S. financial strategists with a choice: if they continue to treat the IMF, World Bank, ITO and NATO as extensions of increasingly aggressive U.S. foreign policy, they will risk isolating the United States. Europe will have to choose whether to remain a U.S. economic and military satellite, or to throw in its lot with Eurasia.

However, Daniel Yergin reports in the Wall Street Journal (Feb. 7) that China is trying to hedge its bets by opening a back-door negotiation with Guaido’s group, apparently to get the same deal that it has negotiated with Maduro’s government. But any such deal seems unlikely to be honored in practice, given U.S. animosity toward China and Guaido’s total reliance on U.S. covert support.

The Saker: Venezuela kept a lot of its gold in the UK and money in the USA.  How could Chavez and Maduro trust these countries or did they not have another choice?  Are there viable alternatives to New York and London or are they still the “only game in town” for the world’s central banks?

Michael Hudson: There was never real trust in the Bank of England or Federal Reserve, but it seemed unthinkable that they would refuse to permit an official depositor from withdrawing its own gold. The usual motto is “Trust but verify.” But the unwillingness (or inability) of the Bank of England to verify means that the formerly unthinkable has now arrived: Have these central banks sold this gold forward in the post-London Gold Pool and its successor commodity markets in their attempt to keep down the price so as to maintain the appearance of a solvent U.S. dollar standard.

Paul Craig Roberts has described how this system works. There are forward markets for currencies, stocks and bonds. The Federal Reserve can offer to buy a stock in three months at, say, 10% over the current price. Speculators will by the stock, bidding up the price, so as to take advantage of “the market’s” promise to buy the stock. So by the time three months have passed, the price will have risen. That is largely how the U.S. “Plunge Protection Team” has supported the U.S. stock market.

The system works in reverse to hold down gold prices. The central banks holding gold can get together and offer to sell gold at a low price in three months. “The market” will realize that with low-priced gold being sold, there’s no point in buying more gold and bidding its price up. So the forward-settlement market shapes today’s market.

The question is, have gold buyers (such as the Russian and Chinese government) bought so much gold that the U.S. Fed and the Bank of England have actually had to “make good” on their forward sales, and steadily depleted their gold? In this case, they would have been “living for the moment,” keeping down gold prices for as long as they could, knowing that once the world returns to the pre-1971 gold-exchange standard for intergovernmental balance-of-payments deficits, the U.S. will run out of gold and be unable to maintain its overseas military spending (not to mention its trade deficit and foreign disinvestment in the U.S. stock and bond markets). My book on Super-Imperialism explains why running out of gold forced the Vietnam War to an end. The same logic would apply today to America’s vast network of military bases throughout the world.

Refusal of England and the U.S. to pay Venezuela means that other countries means that foreign official gold reserves can be held hostage to U.S. foreign policy, and even to judgments by U.S. courts to award this gold to foreign creditors or to whoever might bring a lawsuit under U.S. law against these countries.

This hostage-taking now makes it urgent for other countries to develop a viable alternative, especially as the world de-dedollarizes and a gold-exchange standard remains the only way of constraining the military-induced balance of payments deficit of the United States or any other country mounting a military attack. A military empire is very expensive – and gold is a “peaceful” constraint on military-induced payments deficits. (I spell out the details in my Super Imperialism: The Economic Strategy of American Empire (1972), updated in German as Finanzimperium(2017).

The U.S. has overplayed its hand in destroying the foundation of the dollar-centered global financial order. That order has enabled the United States to be “the exceptional nation” able to run balance-of-payments deficits and foreign debt that it has no intention (or ability) to pay, claiming that the dollars thrown off by its foreign military spending “supply” other countries with their central bank reserves (held in the form of loans to the U.S. Treasury – Treasury bonds and bills – to finance the U.S. budget deficit and its military spending, as well as the largely military U.S. balance-of-payments deficit.

Given the fact that the EU is acting as a branch of NATO and the U.S. banking system, that alternative would have to be associated with the Shanghai Cooperation Organization, and the gold would have to be kept in Russia and/or China.

The Saker:  What can other Latin American countries such as Bolivia, Nicaragua, Cuba and, maybe, Uruguay and Mexico do to help Venezuela?

Michael Hudson: The best thing neighboring Latin American countries can do is to join in creating a vehicle to promote de-dollarization and, with it, an international institution to oversee the writedown of debts that are beyond the ability of countries to pay without imposing austerity and thereby destroying their economies.

An alternative also is needed to the World Bank that would make loans in domestic currency, above all to subsidize investment in domestic food production so as to protect the economy against foreign food-sanctions – the equivalent of a military siege to force surrender by imposing famine conditions. This World Bank for Economic Acceleration would put the development of self-reliance for its members first, instead of promoting export competition while loading borrowers down with foreign debt that would make them prone to the kind of financial blackmail that Venezuela is experiencing.

Being a Roman Catholic country, Venezuela might ask for papal support for a debt write-down and an international institution to oversee the ability to pay by debtor countries without imposing austerity, emigration, depopulation and forced privatization of the public domain.

Two international principles are needed. First, no country should be obliged to pay foreign debt in a currency (such as the dollar or its satellites) whose banking system acts to prevents payment.

Second, no country should be obliged to pay foreign debt at the price of losing its domestic autonomy as a state: the right to determine its own foreign policy, to tax and to create its own money, and to be free of having to privatize its public assets to pay foreign creditors. Any such debt is a “bad loan” reflecting the creditor’s own irresponsibility or, even worse, pernicious asset grab in a foreclosure that was the whole point of the loan.

The Saker:  Thank you very much for taking the time to reply to my questions!

The Russian pension chicken is coming home to roost… (UPDATED)

The Saker

The Russian pension chicken is coming home to roost… (UPDATED)

January 18, 2019

[This article was written for the Unz Review]

According to RT, citing a Levada Center poll,

Over 50 percent of Russians are disappointed in the government of Dmitry Medvedev, which, they believe, is unable to curb growing prices and provide jobs for people, a new poll has revealed.  Some 23 percent said they were absolutely sure that the government must resign, with another 30 percent telling Levada-Center that they were also leaning toward this opinion.  This means that a total of 53 percent would like the country to have a new cabinet. Trust in the government has crumbled since September, when only 23 percent advocated its resignation. Meanwhile, the proportion of people who believed the government should stay in charge was 40 percent, with 14 percent expressing full confidence in the cabinet, and 26 percent saying that resignation wouldn’t be the best idea.

Source: http://www.levada.ru/en/ Jan 15th 2019 (details here: https://www.levada.ru/en/ratings/)

This was very predictable and, in fact, I did predict just that when I wrote “A comment I just saw on the YouTube chat of the inauguration was succinct and to the point: “Путин кинул народ – мы не за Медведева голосовали” or “Putin betrayed the people – we did not vote for Medvedev”. This is going to be a very widely shared feeling, I am afraid (…) Medvedev is unpopular and that most Russians hoped to see a new face. Yet Putin ignored this public sentiment. That is a very worrying sign, in my opinion“.  In a subsequent article I wrote that “it is quite clear to me that a new type of Russian opposition is slowly forming. Well, it always existed, really – I am talking about people who supported Putin and the Russian foreign policy and who disliked Medvedev and the Russian internal policies. Now the voice of those who say that Putin is way too soft in his stance towards the Empire will only get stronger. As will the voices of those who speak of a truly toxic degree of nepotism and patronage in the Kremlin (again, Mutko being the perfect example). When such accusations came from rabid pro-western liberals, they had very little traction, but when they come from patriotic and even nationalist politicians (Nikolai Starikov for example) they start taking on a different dimension. For example, while the court jester Zhirinovskii and his LDPR party loyally supported Medvedev, the Communist and the Just Russia parties did not. Unless the political tension around figures like Kudrin and Medvedev is somehow resolved (maybe a timely scandal?), we might witness the growth of a real opposition movement in Russia, and not one run by the Empire. It will be interesting to see if Putin’s personal ratings will begin to go down and what he will have to do in order to react to the emergence of such a real opposition“.

Think about it in this way: we know from ALL the past elections that the pro-Western segment of the Russian population is somewhere around 1-3% (that is why they cannot make it into the Duma).  But let’s generously give that hardcore, liberal, opposition 5%, for argument’s sake.  So if 53% of Russians want a new cabinet, and if 5% of Russians are hardcore pro-Western liberals, then who are the remaining 48%?

Or in this way: if 53% of Russians want a new cabinet, and if Putin’s approval rating is still somewhere in the 65% range, who are those Russians who like Putin but dislike the Medvedev government?

There is an easy cop-out argument which I´ve often offered to explain away this fact:

Levada Center is officially classified as a “foreign agent” under Russian law.  This makes sense: for one thing, Levada Center receives most of its financing from abroad, including the USA and even the Pentagon!  Furthermore, Levada is staffed by liberals (in the Russian meaning of the word which really means “pro-US”) whose biases are also reflected in their work.  However, while this is all true, Levada is still credible enough to be cited even by Russian officials.  Finally, the kind of results Levada publishes are often generally similar to the finding of the official VTsIOMpolling institution, not down to the percentage point, but often reflecting similar trends (check out the VTsIOM English language page here: https://wciom.com/).  So the fact that Putin is much more popular than Medvedev or that the majority of Russian people are unhappy with the government really is not in doubt.

So regardless of the actual numbers, it is clear that the Russian government is only popular with those whom it allows to make a lot of money (corporations and various millionaires and billionaires) and that everybody else strongly dislikes it.

And yet, recently Putin was asked if he was happy with the government and his reply was “on the whole, yes“.

This type of political yoga is hard to sustain in the long term: if Putin is the champion of the interests of the common people, and if most common people feel that the government cares more for millionaires and billionaires, then how can the President say that he is “on the whole happy” with the government?

It is truly a crying shame that the basics of Marxism-Leninism is not taught in schools and colleges any more (even some self-described “Communists” are clearly clueless about what Marx, Lenin or even Hegel taught!).  Not because the solutions advocated by Marx and his followers are so universally effective, but because one can use the Marxist-Leninist conceptual toolkit to better understand the world we live in and, one can do this without necessarily endorsing the solutions offered by Marxism.  For example, in the West at least, very few people are aware of this very simple Marxist-Leninist definition of what a state, any state, really is.  According to Lenin, the state is simply an “apparatus of coercion and violence by which the ruling class governs the society“.  Specifically Lenin wrote:

In essence, the state is ruling apparatus created from the human society. When such a group of people appears, one which is only concerned with ruling over others, and which for that purpose needs a coercion apparatus which can force people to obey by means of jails, special units, armed forces, etc, – that is the moment when the state appears (Lenin, collective works, vol 39, page 69).

From a Marxist point of view, any state is always and by definition the dictatorship of the ruling class, which is a good thing, at least according to the Marxists, when this ruling class is the workers and people, and a very bad thing when the ruling class is the plutocracy.

In the post-modern West, where political discourse has been reduced to a particularly nauseating form of intellectual flatulence, the very notion of “class” and “class warfare” has been fully replaced with vapid (pseudo-) identity politics which completely obfuscate all the real issues and problems our world is dealing with.  Thus, by removing the concepts and categories needed to understand the nature of the struggle which is taking place internationally, but also inside each of the countries currently living under the AngloZionist yoke, the leaders of the Empire have deprived the people they rule over from the means to understand why and how they are oppressed.  All that nonsense about “gay” rights, gun control, #meetoo, the many sex scandals, the struggle for racial identity (White or Black or any other), abortion, drugs and all the rest of the crap we are fed on a daily basis by the AngloZionist propaganda machine are primarily a distraction to keep the eyes of the general population from the real issues.  In a way, this zombification and re-direction to fake topics serves exactly the same function as the red cape of the bullfighter: to keep the bull busy with trying to gore a harmless red piece of cloth while completely missing the real cause of his suffering and eventual death.

From that point of view, the Russian people are much better informed and have a much better understanding of what is going on.  For example, while in the West the people define “democracy” as “people power” (or something similar), in Russia the joke is that “democracy is the power of the democrats” which, in Russia, is a general codeword/euphemism for “pro-US wealthy liberal” who want to turn Russia into some kind of “bigger Poland” or something equally uninspiring.

Various pro-Western “intellectuals” like to say that this is an old Russian pathology: to say that the Czar (President) is very good, but his court (the Ministers) are bad and that this makes absolutely no sense. These are the folks who go as far as denying the existence of a struggle between what I call Eurasian Sovereignists (roughly Putin supporters) and Atlantic Integrationists (roughly Medvedev and the “economic block” of this government).

The folks who deny this remind me of something Berthold Brecht once wrote after the 1953 uprising in Berlin in a short poem entitled “The Solution”: (emphasis added)

After the uprising of the 17th of June
The Secretary of the Writers’ Union
Had leaflets distributed in the Stalinallee
Stating that the people
Had forfeited the confidence of the government
And could win it back only
By redoubled efforts. Would it not be easier
In that case for the government
To dissolve the people
And elect another?

This deep alienation from the Russian masses, this notion that the Russian people have, yet again, failed to heed the “wise words” of the “progressive intelligentsia” and other (mainly financial) “elites” has plagued the Russian ruling classes since Peter I and is still at the very core of their worldview.  Believe you me, the Russian “liberals” and the folks in the West who deny that there is any 5th column in Russia are psychologically and politically joined at the hip: neither one of them can accept this.  Furthermore, both the Russian “liberals” and the western believers in the values of “democracy” and “free market capitalism” share exactly the same worldview: they want the Russian people to become “Europeans” not in a geographical sense, of course (geographically speaking most Russian live in the European part of Russia), but culturally!  This is what the Popes wanted, this is what the French Freemasons wanted, this is what the Nazis wanted, and this is what the AngloZionists want.  That dream to turn Russians into Europeans while totally cleansing them from any “Russian-ness” is what united *all* the invaders of Russia over the centuries.

But the “stubborn” Russian people just don’t seem to “get it” and, for some totally mysterious reason, they always resist all these “benevolent” western attempts at “civilizing” them.

This is exactly what we see today: Putin and his Eurasian Sovereignists try as hard as they can to *sovereignize* Russia; in other words, they want to make Russia *truly* Russian again.  Sounds basic, but that is categorically unacceptable to the Russian plutocrats and to their supporters in the West.  Thus any kind of defense of the Russian-ness of Russia is immediately and contemptuously dismissed as “national leftism”, “nationalism” or, God forbid!, “monarchism”.  And when the person trying to make the argument that Russia ought to be Russian uses Marxist concepts or categories, these arguments are also dismissed out of hand as an “outdated rhetoric of a system which has failed and discredited itself”.  What they fail to realize is to say that the collapse of the Soviet Union was due primarily/solely to the Marxist or Communist ideology is just as stupid as blaming the current collapse of democracy in the USA on the writings of the Founding Fathers rather than on the SOB politicians who are destroying this country day after day after day.  Tell me: when the USA finally bites the dust, will you simply declare that “democracy is dead” and that the “collapse of the USA proved that democracy is not a viable regime”?  So yes, the Soviet Union did indeed collapse, broken into 15 pieces by its own ruling elite (the Nomenklatura), but the ideas contained in the Marxist-Leninist ideology have not only not been “defeated” – they have not even been challenged (more on this issue here).

But, thank God! most Russians are still not willing to be incorporated into the “European cultural Borg collective“, at least not in the cultural sense.  And in spite of 300 years of oppression by various pro-western regimes (with various degrees of russophobia, not all were equally bad), the Russian people still want to remain Russian, not just by speaking a language, but by having a ruler and a regime in power which they feel defends their interests and not the interests of the ruling class. They want to live in their own civilizational realm, and not the kind of post-Christian intellectual desert the West has become.

Many decades of rabid russophobia by the rulers of the AngloZionist Empire have convinced the Russian people that they have no friends in the European or North American ruling elites and that true freedom comes through liberation, not submission.  That, and the appalling example of the consequences of the “Euromaidan” in the Ukraine.

At the end of the day, it is not about GDP or the availability of cheap consumer goods.  At the end of the day, it all depends on real, moral, ethical, spiritual and civilizational values.  This was true 1000 years ago and this is still true today.  At least in Russia.

It is very important to keep a close eye on this trend: the appearance of slowly but surely growing (truly) patriotic opposition (as opposed to the CIA-paid clowns in the Russian liberal camp).  As for the “official” opposition (LDPR, KPRF and the Just Russia), they might decide to grow a few teeth, initially small, baby teeth only, but if this trend accelerates, they might decide to look a tad more credible.  Until now the rather lame and ridiculous LDPR & KPRF parties are just a collective form of court jesters with no real opposition potential.  Just look at how the KPRF, thoroughly discredited by their crazy choice of the millionaire Grudinin for candidate, jumped onto the pension reform PR-disaster to suddenly try to launch a referendum.  This would never have happened in the past.

The political landscape in Russia is becoming more complicated, which is both good and bad.  It is bad because Putin’s personal political credit suffers, however modestly for now, from his continuous inability to purge the Kremlin from the 5th columnists, but it is also good because if things get bad enough Putin will have no choice but to (finally!) get rid of at least the most notorious 5th columnists.  But fundamentally the Russian people need to decide. Do they really want to live in a western-style capitalist society (with all the russophobic politics and the adoption of the terminally degenerate “culture” such a choice implies), or do they want a “social society” (to use Putin’s own words) – meaning a society in which social and economic justice and the good of the country are placed above corporate and personal profits.

You could say that this is a battle of greed vs ethics.

The future of Russia, and much of the world, will depend on the outcome of this battle.

The Saker

UPDATE: well, just as I was mentioning that the fact that Levada Center and VTsIOM mostly agree, at least on trends, the Russian media is now reporting that the latter now also is reporting a drop in the popularity of Putin.  And just to make things worse, the Russian authorities have deported an (in-)famous anti-Nazi Ukrainian journalist, Elena Boiko, to the Nazi-occupied Ukraine in spite of the fact that Boiko had requested political asylum in Russia.  Now, Boiko is a very controversial person for sure (and, personally, not *at all* my cup of tea), but the sole fact that Russia would deport ANY anti-Nazi activist to the Nazi-occupied Ukraine is disgusting and revolting.  And, sure enough, the bovine-excreta is already hitting the proverbial fan as now members of the Duma, journalists and various personalities are demanding explanations for this absolutely stupid and deeply immoral act.  Sadly,  can only agree with Nikolai Starikov who speaks of a “liberal revanche” following the “Russian Spring” of 2014.  If this kind of nonsense continues we will see a further deterioration of Putin’s personal rating along with a gradual degradation of the Russian political environment.

War Essay- The consequences of nuclear war on US society

January 13, 2019

War Essay- The consequences of nuclear war on US society

by Phillyguy for The Saker Blog


The US emerged from WWII as the world’s leading economic and military power. Since that time US hegemony has been predicated on: 1) unrivaled military strength, 2) control of world’s energy reserves and 3) primacy of the US dollar as the world’s reserve currency. All of the pillars supporting US global dominance are now being threatened by continuing US economic decline coupled with ongoing economic development of China and other Asian countries, who are increasingly using currencies other than the US dollar, for international trade. US economic decline is fueling global instability and increasing the possibility of conflicts erupting between global powers. Thus the threat of nuclear war hangs over the world.

How did we get here?

The US emerged from WWII, with its manufacturing base intact and was the world’s dominant economic power. This began to change in the mid-1970s, as US corporate profits began to stagnate/decline, a consequence of increasing competition from rebuilt economies in Europe- primarily Germany (Marshall Plan), Japan and Korea (US wars in Korea and Vietnam) and later China (1). To deal with these structural economic problems confronting US capitalism, the directors of economic policy in the government and large corporations faced a decision that would play a major role in shaping global geopolitics for the next 5 decades. They could make large investments in the domestic economy, developing state of the art manufacturing facilities and equipment that would enable US corporations to effectively compete with those in newly emerging economies, or abandon manufacturing and change the structure of the US economy. As we now know, policy makers chose the latter route. This policy was based on economic attacks on poor people and labor, financial deregulation, increased spending on the military and war and rampant financial speculation.

In November 1980, Ronald Reagan was elected president and during his administration, began a frontal assault on organized labor by firing members of the Professional Air Traffic Controllers Organization (PATCO) who went on strike over grievances concerning working conditions in 1981. Reagan also instituted tax cuts for the wealthy, which have continued under succeeding administrations (2). In 1993, Bill Clinton entered office and proceeded to attack poor people by cutting public assistance to poor families- signing the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and pledging to “end welfare as we know it” (3), facilitated job outsourcing (passage of NAFTA) and deregulated finance by signing the Gramm–Leach–Bliley Act (GLBA) aka Financial Services Modernization Act of 1999, which also repealed the Glass–Steagall act, a component of the depression era 1933 Banking Act (4). In 2001, George (“W”) Bush became president and immediately signed legislation cutting taxes for the wealthy, including major cuts to inheritance taxes. Following the 911 attacks on the World Trade Center in NYC, President GW Bush sent US troops to Afghanistan, to ostensibly find Osama bin, head of al-Qaida and alleged leader and organizer of the 911 attacks. In his 2002 State of the Union address, the President gave his now famous “axis of evil” speech, which included North Korea (DPRK), Iran and Iraq (5). This list was later expanded to include Cuba, Libya, Syria and Venezuela (6). In 2003, President Bush invaded Iraq and deposed their leader, Iraqi President, Saddam Hussein.

2008 Financial Crash

The policies instituted above combined to create the 2008 financial collapse, the largest financial disaster since the Great Depression. In an attempt to contain the economic damage resulting from this financial implosion, the US FED bailed out Wall St banks and to prevent further falls in the Stock market, has provided Wall St with a nearly unlimited supply of ultra-cheap funds (circa $4 trillion) for share buybacks and MA deals in what has been referred to as an “orgy” of corporate debt. Despite multiple tax cuts for the wealthy and financial largess of the US FED, and other Central banks including Bank of Japan (BOJ) and European Central Bank (ECB), global capitalism is confronted with slack demand, high levels of excess capacity and skyrocketing debt. In addition, economies in the US and EU are challenged with high employment and anemic job growth.

The economic policies shaped over the last four decades have been continued under Obama and Trump and have played a decisive role in directing US foreign policies since the mid-1970s. The relatively rapid economic decline since 2000 directly threatens US global hegemony and in response the Pentagon has engaged in an increasingly reckless, bellicose and astronomically expensive foreign policy (7, 8). Indeed, the US is currently involved in wars stretching from the Levant, to Caspian Basin, South-west Asia, Persian Gulf, China Sea, Indian Ocean, Horn of Africa, the Maghreb, to Eastern Europe and Russian border. The staggering economic costs of these wars can be seen with conflicts in Afghanistan (longest running war in US history) and Iraq being estimated to have cost US taxpayers $ 6 trillion (9).

Focus on China

The emergence of China as a potential competitor to US hegemony was recognized by the Obama administration and in response, reoriented US foreign policy with his “Asia Pivot” in 2012 (10). Harvard Professor Graham Allison has warned that the US and China are in “Thucydides Trap” using Athenian historian Thucydides analysis of the Peloponnesian War (431–404 BC), where “it was the rise of Athens, and the fear that this inspired in Sparta, that made war inevitable”

(11). Tensions with China have been heightened by the Trump administration’s protectionist trade policies, tariffs on Chinese exports to the US and out right thuggish behavior, an example being the arrest of Huawei executive Meng Wanzhou in Vancouver, Canada (12, 13). The anti-China campaign is being ratcheting up further with vague accusations of “China’s attempts to obtain trade secrets and intellectual property through a state-coordinated cyberespionage campaign….. a brazen effort by the Chinese to obtain Western technology and other proprietary information”, featured in a prominent piece in the “paper or record” (NYT) by David Sanger (14). Sanger is a member of the Council on Foreign Relations (www.cfr.org) which plays a major role in influencing US foreign policy.

Not surprisingly, most of the “analysis” of US-China relations presented by establishment academics such as Graham Allison or corporate media pundits like David Sanger present an accurate picture of economic relationships between the US and China. Unfortunately, consistently lacking is a critical and comprehensive examination of how and why this happened- i.e., decades of deliberate US government and corporate policies which facilitated China’s economic rise and accelerated US economic decline (see above). This is not surprising as intuitions like the John F. Kennedy School of Government at Harvard University, Council on Foreign Relations, Rand Corporation and related “think tanks” along with corporate media are all committed to supporting policies which promote corporate interests and maximize corporate profits.

Thus, campaigns against China and Russia share broad support among the directors of US foreign policy. Collectively, these polices have exacerbated international relations, greatly increasing the threat of a direct military confrontation between the Global powers and potential use of nuclear weapons, as President Trump laid out in his recent National Security Strategy (NSS) speech (15). In his traditional Christmas message Pope Francis stated “The winds of war are blowing in our world and an outdated model of development continues to produce human, societal and environmental decline”. Indeed, The Pope specifically mentioned the decision by US President Trump to recognize Jerusalem (Al-Quds) as Israel’s capital and his bellicose rhetoric towards North Korea, setting up potential new global flashpoints (16). By closely aligning themselves with US policies which increasingly threatens China and Russia with military attack, US “allies”- members of NATO, South Korea, Japan, Australia and New Zealand, will likely be targeted by Russian and Chinese nuclear weapons in the event of hostilities.

While there has been extensive analysis of US foreign policy and ongoing US wars, there has been surprisingly little inquiry of the consequences of a nuclear attack on the US. Such a discussion is made all the more urgent by the expansion of US/NATO into Eastern Europe and close to the Russian border, the US/NATO supported coup in Ukraine in 2014 (17), conflicts in the Middle East and Trump’s bellicose rhetoric towards the Democratic People’s Republic of Korea (DPRK), Iran, China and Russia, US withdrawal from the Paris Climate accord, JCPOA (Iran nuclear deal) and most recently, exiting the INF treaty with Russia.

Vulnerability to War

The job of military strategists, like that of prosecuting and defense attorneys in a legal case is to assess the strength and weakness of their opponent(s) and design strategies taking into account these features (18). In the case of the US, the strengths are pretty obvious. The US possesses formidable military power, albeit being gradually confronted by Russia and China, and the dollar is still the dominant currency in the international monetary system, although its strength is being eroded by growing US debt and competition from the Euro and Chinese renminbi, which was recently added to IMF’s basket of reserve currencies. The primacy of the dollar is also seeing competition from bitcoin and other cryptocurrencies (19).

The structural features of US society make it extremely susceptible to nuclear war. Some of these attributes include: population density, energy dependence, reliance on information technology and social instability.

1. Population Density A dozen regions comprise the major economic centers which drive the US economy (20). Approximately 2/3 of the US population lives on littoral areas of the country- 38% on the East Coast (Atlantic Ocean), 16% on West Coast (Pacific Ocean) and 12% on the Gulf Coast (21).

2) Energy US society is highly energy dependent. The US has 5% of the world’s population but consumes 18% of the world’s energy. Approximately 65% of electricity is generated from fossil fuel (oil, natural gas and coal) while 20% is obtained from nuclear power (22, 23). Nuclear power plants rely on electrically powered pumps to circulate water around the reactor cores to keep them from overheating. When these pumps cease functioning, the reactor cores overheat and literally undergo a “meltdown” releasing highly radioactive uranium fuel assemblies into the environment, which occurred during the 1986 Chernobyl nuclear plant accident in Ukraine (24) and the 2011 Fukushima Daiichi nuclear disaster in Japan (25).

3) Transportation and Agriculture. Our transportation “system” relies on energy inefficient automobiles and planes as the primary means of local and distant travel. US agriculture is extremely energy-dependent, requiring 10 calories of energy to produce 1 calorie of food (26). Further, the average food commodity transits 1500 miles from production point to consumption site- e.g., California strawberries in PA (usually transported on diesel fueled trucks; 27).

4. Information Technology – The functioning of our society- industries and businesses which provide jobs and keep our economy running, healthcare, educational system and the government all rely on information flow to function (28). This system encompasses local computers, the internet and fiber optic cables serving as data pipelines, computer server farms and “cloud” storage facilities, all of which consume lots of electricity (29).

5. Social Instability Our society is extremely polarized- exemplified by the election of Donald Trump in November, 2016. Following Trump’s election, there has been a rise in racist, neo-Nazi groups as we saw in Charlottesville, VA (30).

Likely Targets

In the case of a major conflict, key targets in the US will include military installations, major cities and energy infrastructure, the last two being “soft” targets, easily hit and difficult to defend. Attacks on energy related facilities will include electrical generating stations, oil and natural gas production sites and refineries, storage facilities, pipelines and loading docks. Also targeted will be fiber optic cables and computer server farms and storage facilities. When this happens, the US economy and society will completely cease normal functioning. Electrical generation will stop and the pumps required for distribution of potable water and operation of sewage treatment plants stop working, resulting in the rapid development of Cholera epidemics, as observed in Yemen (31, 32). Rapidly dwindling supplies of gasoline and diesel fuel mean that transportation is greatly restricted, businesses, hospitals and education facilities, heavily reliant on electricity and information technology completely stop functioning. Energy intensive agricultural production rapidly declines resulting in food shortages and starvation. Lack of electricity causes the electric pumps circulating water around reactor cores of the 98 nuclear power plants currently operating in the country (23) to stop, resulting in core meltdowns, producing Fukushima and Chernobyl- like nuclear disasters across the US. These economic and social disruptions will likely lead to vast social panic and unrest across the country, resulting in violent confrontations such as occurred in Charlottesville, VA, 2017.

There is no way an energy intensive, technologically advanced society like the US can adapt to conditions following a major war. This will likely lead to complete destruction of the US as a country and may well lead to extinction of the human species. With the exception of a handful of journalists such as Professor Michel Chossudovsky, director of the Centre for Research on Globalization, Steve Lendman, Geopolitical analyst, Helen Caldicott, Australian physician and anti-nuclear activist, and discussion of a “nuclear winter” following a nuclear war (33), there has been little discussion about the direct impact of a major war on US society by mainstream media outlets.

Concluding Remarks

The US is very vulnerable to any nuclear attack, and from my perspective, it is doubtful that US society will survive such an event. Unfortunately, it appears that the only approach the US is following to address its structural economic decline is an increasingly bellicose and belligerent foreign policy. Indeed, in September, 2017, President Trump gave a speech in front of the UN, referring to DPRK leader Kim Jong-un, as “Rocket Man” and stating he would “totally destroy North Korea”.

Not to be outdone, UN Ambassador Nikki Haley said at a recent UNSC meeting “if war comes, make no mistake, the North Korean regime will be utterly destroyed”. Russia and China share a border with North Korea and thus will be directly affected by any war on the Korean Peninsula, potentially leading to a nuclear war, as recently pointed out by William Polk (34, 35). Rather than toning down their bellicose rhetoric, the Trump administration, along with members of Congress have continued issuing threats against China and Russia. Speaking to the UN General Assembly in September, 2018, President Trump and his top advisors delivered “fiery” speeches against Iran (36).

Final Points

1. The US is the only county in the world to have used nuclear weapons, which were dropped on Hiroshima and Nagasaki Japan at the end of World War II (37). Following the “success” of these attacks, the Pentagon had detailed plans to use over 200 atomic bombs to strike 66 “strategic” targets in the Soviet Union (38) and since that time, plans to attack Russia have been continuously upgraded (39, 40).

2. The ruling elite in the US are well aware of continuing (accelerating?) US economic decline and looming strategic debacles confronting the Pentagon in Afghanistan, Iraq and Syria (7-9). At the same time Russia, China and Iran are incorporating increasingly sophisticated military hardware into their armed forces (for an excellent analysis see 41, 42). The US response has been an increasingly reckless, bellicose and astronomically expensive foreign policy.

3. Once nuclear weapons are used, the chances of a rapid escalation are very high.

4. The use of mini-nukes has been pushed by US military planners as representing “less risk” to the civilian population. Indeed, the US is currently undertaking a $1.3 Trillion upgrade of existing nuclear weapons, which began under the Obama Administration (43). Trump has announced the US will leave the INF treaty unless Russia discontinues certain missile programs (44).

5. In the event of a nuclear war, the devastation will be rapid and very widespread and there is no preparation for such an event. US infrastructure will be completely destroyed, which will likely tear our society apart.

I was a “baby boomer” and grew up when the US and Soviet Union were testing atomic bombs. I recall my Mom, a member of “Women for Peace”, putting a bumper sticker on our family car that read “Our Only Shelter is Peace”. This is still true today.


1. The “Decline” of U.S. Economy: A Historical Comparison. By Chen Dezhao, China Institute for International Studies; Link: http://www.ciis.org.cn/english/2011-11/18/content_4635120.htm

2. Reagan insider: ‘GOP destroyed U.S. economy’. By Paul B. Farrell Market Watch Aug 10, 2010; Link: http://www.marketwatch.com/story/reagan-insider-gop-destroyed-us-economy-2010-08-10

3. The End of Welfare as We Know It- America’s once-robust safety net is no more. By Alana Semuels The Atlantic, Apr 1, 2016; Link: www.theatlantic.com/business/archive/2016/04/the-end-of-welfare-as-we-know-it/476322/

4. Banking Act of 1933 (Glass-Steagall) June 16, 1933. Federal Reserve History; Link: http://www.federalreservehistory.org/essays/glass_steagall_act

5. Text of President Bush’s 2002 State of the Union Address. Washington Post, Jan. 29, 2002; Link: www.washingtonpost.com/wp-srv/onpolitics/transcripts/sou012902.htm

6. Global Warfare: “We’re Going to Take out 7 Countries in 5 Years: Iraq, Syria, Lebanon, Libya, Somalia, Sudan & Iran..” Video Interview with General Wesley Clark By General Wesley Clark and Amy Goodman Global Research, May 14, 2018; Link: www.globalresearch.ca/we-re-going-to-take-out-7-countries-in-5-years-iraq-syria-lebanon-libya-somalia-sudan-iran/5166

7. Losing by “Winning”: America’s Wars in Afghanistan, Iraq, and Syria By Anthony H. Cordesman Aug 13, 2018; Link: www.csis.org/analysis/losing-winning-americas-wars-afghanistan-iraq-and-syria

8. The Costs of War: counted in TRILLIONS. Dec 13, 2017 by Phillyguy for the Saker blog; Link: thesaker.is/the-costs-of-war/

9. United States Budgetary Costs of the Post-9/11 Wars Through FY2019: $5.9 Trillion Spent and Obligated by Neta C. Crawford Nov 14, 2018; Link:


10. The president’s Asia legacy is not worst in recent history. But it’s not the best either. By Michael J. Green Sept 3, 2016; Link: foreignpolicy.com/2016/09/03/the-legacy-of-obamas-pivot-to-asia/

11. The Thucydides Trap: Are the U.S. and China Headed for War? By Graham Allison, The Atlantic, Sept. 24, 2015; Link: http://www.belfercenter.org/publication/thucydides-trap-are-us-and-china-headed-war

12. Trump could make Obama’s pivot to Asia a reality By Josh Rogin Washington Post January 8, 2017; Link:


13. Washington using legal cover to conceal economic banditry by Finian Cunningham RT Dec 12, 2018; Link: http://www.rt.com/op-ed/446285-china-us-economy-huawei/

14. U.S. Accuses Chinese Nationals of Infiltrating Corporate and Government Technology By David E. Sanger and Katie Benner Dec. 20, 2018; Link: http://www.nytimes.com/2018/12/20/us/politics/us-and-other-nations-to-announce-china-crackdown.html

15. Trump’s National Security Strategy: The return of “great power” military conflict By Bill Van Auken 20 Dec 2017; Link: http://www.wsws.org/en/articles/2017/12/20/pers-d20.html.

16. Pope laments ‘winds of war’ blowing around the world in Christmas message. Chicago Tribune. Dec 25, 2017; Link: www.chicagotribune.com/news/nationworld/ct-pope-francis-christmas-message-20171225-story.html

17. It’s not Russia that’s pushed Ukraine to the brink of war By Seumas Milne. The Guardian Apr 30, 2014; Link: http://www.theguardian.com/commentisfree/2014/apr/30/russia-ukraine-war-kiev-conflict

18. Striking a Strategic Balance – Putin’s Preventive Response By Rostislav Ishchenko [Translated by Ollie Richardson and Angelina Siard] Oct 22, 2018; Link: http://www.stalkerzone.org/rostislav-ishchenko-striking-a-strategic-balance-putins-preventive-response/

19. 21st century reserve currencies – (how long) will the dollar-euro dominance prevail? Kevin Koerner and Franziska Winkler Deutsche Bank Nov 15, 2017; Link: http://www.dbresearch.com/servlet/reweb2.ReWEB?rwnode=RPS_EN-PROD$HIDDEN_GLOBAL_SEARCH&rwsite=RPS_EN-PROD&rwobj=ReDisplay.Start.class&document=PROD0000000000455549.

20. The Dozen Regional Powerhouses Driving the U.S. Economy by Richard Florida

Mar 12, 2014; Link: http://www.citylab.com/life/2014/03/dozen-regional-powerhouses-driving-us-economy/8575/

21. People- Geographic Distribution of US Population; Link: http://www.theusaonline.com/people/geographic-distribution.htm

22. What is U.S. electricity generation by energy source? Link: www.eia.gov/tools/faqs/faq.php?id=427&t=3

23. Nuclear Power in the USA (Updated Oct, 2018); Link: http://www.world-nuclear.org/information-library/country-profiles/countries-t-z/usa-nuclear-power.aspx

24. Backgrounder on Chernobyl Nuclear Power Plant Accident; Link: http://www.nrc.gov/reading-rm/doc-collections/fact-sheets/chernobyl-bg.html

25. Fukushima Daiichi Accident; Link: http://www.world-nuclear.org/information-library/safety-and-security/safety-of-plants/fukushima-accident.aspx

26. How to Feed the World By Michael Pollan. Newsweek, May 19, 2008; Link: michaelpollan.com/articles-archive/how-to-feed-the-world/

27. How Far Does Your Food Travel to Get to Your Plate? Center for Urban Education about Sustainable Agriculture (CUESA); Link: cuesa.org/learn/how-far-does-your-food-travel-get-your-plate

28. More Dependence on Internet Leads to More Cyberattacks Worldwide by Elizabeth Lee. VOA, Aug 26, 2017; Link: http://www.voanews.com/a/dependence-on-internet-leads-to-more-cyberattacks/4001728.html

29. The Surprisingly Large Energy Footprint of the Digital Economy. Our computers and smartphones might seem clean, but the digital economy uses a tenth of the world’s electricity — and that share will only increase, with serious consequences for the economy and the environment. By Bryan Walsh. Time, Aug. 14, 2013; Link: science.time.com/2013/08/14/power-drain-the-digital-cloud-is-using-more-energy-than-you-think/

30. Charlottesville rally violence: How we got here. By Eliott C. McLaughlin, CNN Aug. 14, 2017; Link: www.cnn.com/2017/08/14/us/charlottesville-rally-timeline-tick-tock/index.html

31. Yemen is currently facing the largest documented cholera epidemic in modern times. A new report warns it could get worse. By Alanna Shaikh, MPH UN dispatch May 08, 2018; Link: http://www.undispatch.com/yemen-is-currently-facing-the-largest-documented-cholera-epidemic-in-modern-times-a-new-report-warns-it-could-get-worse/

32. Cholera epidemic in Yemen, 2016–18: an analysis of surveillance data. By Anton Camacho, et al. The Lancet Global Health Lancet Glob Health 2018; 6: e680–690; Link: www.thelancet.com/action/showPdf?pii=S2214-109X%2818%2930230-4

33. The Risk of Nuclear Winter by Seth Baum May 29, 2015; Link: fas.org/pir-pubs/risk-nuclear-winter/

34. America on the Brink of Nuclear War: Background to the North Korean Crisis By William R. Polk Sep 6, 2017;

Link: www.counterpunch.org/2017/09/06/mayday-korea-america-on-the-brink-of-nuclear-war

35. America on the Brink of Nuclear War: What Should We Do? By William R. Polk Sep 7, 2017; Link: www.counterpunch.org/2017/09/07/america-on-the-brink-of-nuclear-war-what-should-we-do).

36. President Trump’s Efforts to Isolate Iran at the U.N. Backfired By W.J. Hennigan Sep 26, 2018 Time; Link: http://time.com/5407295/donald-trump-iran-united-nations/

37. Hiroshima and Nagasaki: Gratuitous Mass Murder, Nuclear War, “A Lunatic Act” By Stephen Lendman Global Research, Aug 09, 2018; Link: www.globalresearch.ca/hiroshima-and-nagasaki-gratuitous-mass-murder-nuclear-war-a-lunatic-act-2/5467504

38. “Wipe the Soviet Union Off the Map”, 204 Atomic Bombs against 66 Major Cities, US Nuclear Attack against USSR Planned During World War II When America and the Soviet Union Were Allies. By Prof Michel Chossudovsky Global Research, Oct 27, 2018; Link: www.globalresearch.ca/wipe-the-ussr-off-the-map-204-atomic-bombs-against-major-cities-us-nuclear-attack-against-soviet-union-planned-prior-to-end-of-world-war-ii/5616601

39. The U.S. Government’s Plan Is to Conquer Russia by a Surprise Invasion by Eric Zuesse for The Saker Blog Dec 11, 2018; Link: thesaker.is/the-u-s-governments-plan-is-to-conquer-russia-by-a-surprise-invasion/

40. The US is Planning a Major War with Russia and China. By James ONeill, Global Research, Dec 24, 2018; Link: www.globalresearch.ca/the-us-is-planning-a-major-war-with-russia-and-china-reports/5663819

41. Losing Military Supremacy: The Myopia of American Strategic Planning Byby Andrei Martyanov, 2018 (Book); Link: www.amazon.com/Losing-Military-Supremacy-American-Strategic/dp/0998694754

42. Solari Report- quarterly interview with The Saker Nov 21, 2018; Links: thesaker.is/solari-report-quarterly-interview-with-the-saker-2; www.youtube.com/watch?v=rDsL2Fm2Ddc

43. U.S. Nuclear Modernization Programs. Arms Control Association Aug 13, 2018; Link: http://www.armscontrol.org/factsheets/USNuclearModernization

44. US demands Russia ‘end or modify’ missile it doesn’t like to save INF treaty RT. Dec 7, 2018; Link: http://www.rt.com/usa/445791-usa-demands-russia-scraps-missile-inf/

The Saudi Engine of Repression Continues to Run at Full Speed


David Ignatius

One hundred days after the murder of Jamal Khashoggi, Saudi Crown Prince Mohammed bin Salman is pressing ahead with anti-dissident campaigns and remains in regular contact with Saud al-Qahtani, the media adviser whom the CIA believes helped organize Khashoggi’s killing, according to US and Saudi sources.

The Saudi crown prince, far from altering his impulsive behavior or signaling that he has learned lessons from the Khashoggi affair, as the Trump administration had hoped, appears instead to be continuing with his autocratic governing style and a ruthless campaign against dissenters, the US and Saudi sources said this week.

“Domestically, he feels very confident and in control. As long as his base is secure, he feels that nothing can harm him,” says one American who met recently with MBS, as the crown prince is known. One of Britain’s most experienced Saudi-watchers agreed: “He’s completely un-chastened by what has happened. That is worrying for Western governments.”

MBS has been contacting Qahtani and continuing to seek his advice, according to the US and Saudi sources. A Saudi source said Qahtani had also met recently at his Riyadh home with his senior deputies from the royal court’s Center for Studies and Media Affairs, the cyber-command post he ran until shortly after Khashoggi’s death. “I’m being blamed and used as a scapegoat,” Qahtani is said to have told his former aides.

“Qahtani holds a lot of files and dossiers,” says the American who met recently with MBS. “The idea that you can have a radical rupture with him is unrealistic.” A Saudi who is close to the royal court agrees: “There’s stuff [Qahtani] was working on that he may have to finish, or hand over,” he said.

One indication that MBS hasn’t altered his Qahtani-style Internet bullying tactics is an aggressive social media campaign launched this week to attack Khashoggi and Omar Abdulaziz, a dissident living in Canada.

An Arabic hashtag on Twitter surfaced Thursday claiming to offer “Fact” about the two men’s alleged involvement in anti-Saudi conspiracies funded by Qatar. One English-language post showed pictures of the two men with the caption “Jamal and Omar: Qatar’s Agents.”

Also appearing on Twitter was a slick video titled “Qatar System Exposed,” apparently produced by a company with the same name as a Dubai-based studio. The video includes English subtitles alleging that Khashoggi was involved in a plot to “create a new destabilizing Arab Spring to unsettle Arab countries, mainly, Saudi Arabia.”

Another new video argues that The Post shouldn’t have given Khashoggi a platform as a columnist when he was also receiving editing advice on his columns from the head of the Qatar Foundation International, a Qatar-funded group based in Washington.

Ironically, the main evidence offered to support these charges of Khashoggi’s links to Qatar is a Dec. 22 article in The Post by Souad Mekhennet and Greg Miller. The Qatar Foundation link was hardly a secret; I mentioned it in a long column about Khashoggi that appeared on Oct. 12, 10 days after he disappeared in Istanbul.

Even MBS’s strongest supporters in the United States appear concerned by the new social media campaign. Ali Shihabi, the head of the Saudi-backed Arabia Foundation, commented in an email to me Thursday:

“I have no idea who is behind this new campaign, but it certainly does not seem wise.” He argued that despite a “concerted campaign funded by Qatar and others . . . the kingdom’s media organs had so far exercised great self-control since the Jamal tragedy, and I would hope that continues.”

The videos and Web postings in the new campaign all have the professional feel of modern media studios in Dubai. According to a Saudi source, Qahtani recently made two trips to the United Arab Emirates, even though he is supposedly under house arrest in Riyadh. The trips couldn’t be confirmed independently.

The Treasury Department said Nov. 15 in imposing sanctions on Qahtani that he “was part of the planning and execution of the operation” that led to Khashoggi’s death.

The American who recently visited MBS said he cautioned him that top US military and intelligence officials were weighing whether the crown prince was a dictator, like Iraq’s Saddam Hussein, nominally committed to modernization but unreliable, or a solid ally of the United States. “As long as you keep Qahtani, people will say you’re more like Saddam,” this visitor warned.

Senior Saudi officials who have discussed MBS’s continuing contact with Qahtani have urged US patience. “If I try to ban him, [Qahtani] will find another channel,” a senior prince is said to have advised the administration. Meanwhile, the Saudi engine of repression continues to run at full speed.

Source: WP, Edited by website team

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Russian Economy Presents a New Surprise by Evgeny Super

December 23, 2018

Translated and captioned by Leo.

Make sure to press CC to turn on English captions.


The American agency Bloomberg has published a report on the state of developing countries. Russia has changed its place immediately to five positions, which was a complete surprise for many. How did this happen and what follows from this – we will explain after the news bulletin.


News time

In the Rostov Oblast (region), the first in the country production of steel towers necessary for wind power installations was launched. Investments – 800 million rubles ($11.6 million).

In the town of Dubna, we have solved  the issue of power aviation wires. These are able to work in an open flame for twenty minutes. They are designed to complete the MS-21 aircraft and not only it.

In Volgodonsk, a new production  of equipment for the nuclear power industry and other industries has opened.

In the Krasnodar Krai (territory) – a substation worth about 3 billion rubles ($43.5 million). Almost all equipment of the facility is Russian.

In Tolyatti – the production of heating radiators.

In the Novosibirsk Oblast, pharmaceutical production  was opened with an investment of 600 million rubles ($8.7 million).

In the Kirov Oblast, a full cycle of production of glucose-lowering drug was started. In terms of output, the plant will become one of the largest in the world.

In Irkutsk, production of blood glucose meters and test strips for measuring blood sugar levels was opened. Investments – 500 million rubles ($7.2 million).

In the Moscow Oblast – a factory  of next generation boilers. The products will help replace up to 15% of imports.

In Bashkiria – the production of import-substituting multi-strand steel ropes.

In Chechnya – a factory of building materials.

In the Smolensk Oblast – packaging materials.

A large livestock complex was opened in the Ulyanovsk Oblast – an investment of 600 million rubles ($8.7 million).

In the Stavropol Krai – an enterprise for the storage and processing of vegetables worth about 1 billion rubles ($14.5 million).

Economy time

According to the rating  of countries with emerging markets from the Bloomberg agency, Russia climbed five positions up and ranked second after Malaysia. China is in third place with a large margin.

In compiling the rating, the following indicators were taken into account: GDP growth, state of the sovereign credit rating, foreign exchange reserves, equity and bond markets. The compilers of the rating, having analyzed the state of affairs in the Russian economy, actually admitted that the sanctions could not bring it down. However, if there were no sanctions, then we probably would have developed much faster.

Today, Russia remains a country with low external debt and growing gold reserves, which allow at any time to get rid of debt and not to resort to external borrowing. Far from all developing countries can afford this luxury in the modern world, which is reflected in the ranking.

Of course, this does not mean that there are no problems in the Russian economy, but this means that its condition is very stable and if no external shocks happen, then we will continue our development.

If, for some reason, sanctions are lifted from Russia, this will lead to an accelerated development of the economy, taking into account all the accumulated potential. However, that is exactly why we believe that no one will cancel the sanctions.

Now let’s talk about our victories.

Victory time

At the X International Informatics Tournament in Bulgaria, Russian schoolchildren won  29 out of 87 medals, including 11 gold ones.

At the World Olympiad of Robots in Thailand, the Russian team won three medals – 2 gold and one bronze.

At the same time, the Russian teams took 6 gold medals and one bronze medal at the Asian Youth Robotics Championship.

And at the XV International Junior Science Contest in Botswana, our guys received 1 gold and 5 silver medals.

Export time

It would seem that just recently we talked about the opening of the Yamal LNG natural gas liquefaction plant, and it has since managed to grow noticeably. The other day, ahead of schedule for a year, the third production line was launched. Now the plant is officially the largest in Russia and will become even larger since the construction of the fourth line  has already begun. But even on the existing scale, Yamal LNG has already occupied 5% of the world market for liquefied natural gas. During the year of operation, more than 100 tanker shipments of LNG were produced and delivered to consumers on five continents with a total volume of about 7.5 million tons.

However, as always, we note with the gas supplies, the Russian expansion into the world markets is not limited to just this. In Peru, the center for maintenance and repair of Russian-made helicopters was recently opened.

In Columbia, an all-terrain vehicle batch  was shipped from the Vologda Oblast for the needs of the local police.

In Cuba, a Russian-Cuban station for climatic testing of materials and structural elements has been opened.

In Armenia, a new Russian station  for collecting measurements of the GLONASS system.

Russian food continues to conquer the world. In particular, the export of unique sweets produced under the brand name “Siberian Medicine Man” (Sibersky Znakhar) is growing. The history of the manufacturer is another excellent example of how, with the right approach, you can not only create a great business, but also help popularize Russia abroad. Siberian honey, jam, handmade chocolate is in demand in Asia and Europe as a natural product. You can watch the colorful video about this Siberian producer on the channel of our partners by the link in the description.

*Clip plays*

We work on producing natural ecological products from our Siberian wild berries, herbs and even pine cones. And we don’t add any chemical additives. For example even instead of citric acid, we use freshly squeezed lemon juice.

*Clip ends*

The right thing

It is necessary to promote abroad not only Russian goods and services, but also meanings. We remind you that if you implement any socially useful Internet project, the site of which is located in the domain zone.rus, then you can take part in our competition. Just send a link to the project in our editorial and wait for the results. Prizewinners will be awarded a free story about the project in our program and the extension of the domain in the “Rus” zone for 9 years from our general partner.

If your project is in a different domain zone, then in order to participate in the competition you only need to register a mirror in the .rus zone. Let’s fill the information space with useful projects together!

We wish you a good and vigorous week! The text of the publication and the original sources and links can be found in the description. Subscribe to our channel, join our groups and be sure to share this video with your friends.

President Vladimir Putin’s annual news conference December 20, 2018

December 20, 2018

President Vladimir Putin’s annual news conference December 20, 2018

President  Vladimir Putin’s annual news conference

December 20, 2018


President of Russia Vladimir Putin: Good afternoon, colleagues, friends.

Let us begin our traditional end-of-year meeting that we call a news conference.

As always, I will spend just a few brief seconds to sum up the results of the outgoing year. A lot has been said already, but I have the latest data reflecting the most recent results, some just a couple of days old.

In the first nine months of 2018, GDP increased by 1.7 percent, while the Economic Development Ministry expects the annual increase to total 1.8 percent. Industrial output was growing at a faster pace, totalling 2.9 percent in the first ten months of 2018, with the annual results expected at 3 percent, up from a 2.1 percent growth in 2017. In addition, processing industries have been growing at a somewhat faster pace of 3.2 percent.

In the first three quarters fixed capital investment increased by 4.1 percent. Cargo shipments and retail trade are on the rise, having increased by 2.6 percent. Consumer demand growth has been apparent. This is a positive factor. After a lengthy interval, the population’s real income has shown some, albeit very moderate, growth. According to the latest statistics, real incomes will increase by 0.5 percent. I hope that this momentum will be maintained, since real pay levels are on the rise, having grown by 7.4 percent in the first nine months, which is expected to give us 6.9 or 7 percent by the end of the year.

Inflation remains at an acceptable level, although it has increased a little in the past week, by 0.5 percent, I think. Therefore, we will be able to reach the Central Bank’s reference rate of 4 percent and will have an inflation rate of 4.1 percent to 4.2 percent – somewhere just over 4 percent.

The unemployment rate is going down, which is good news. If last year it hit a historical low of 5.2 percent, this year it will be even lower – 4.8 percent.

The trade balance surplus is growing. In 2017, if you remember, it was around $115 billion. Over the three quarters of this year we already achieved $157 million. As of the end of the year, we expect it to reach $190 billion.

Our finances are growing stronger. Our gold and foreign currency reserves have grown by over 7 percent. In the early 2018, they amounted to $432 billion while now they stand at almost $464 billion.

For the first time since 2011, we will have a budget surplus. We are about to reach the federal budget surplus of 2.1 percent of the GDP. The National Welfare Fund has grown by around 22 percent.

The average annual insurance component of the retirement pension stood at 13,677 rubles in 2017. By the end of this year, it will be 14,163 rubles.

Life expectancy has also increased slightly compared to 2017, from 72.7 to 72.9 years.

These are the general results that I wanted to mention in the beginning. Let’s not waste our time and proceed to your questions and my attempts to answer them.

Presidential Press Secretary Dmitry Peskov: Let us begin by giving some priority to the Kremlin pool. Its members worked with us throughout the year, following the President both in Russia and abroad.

ITAR-TASS, the state news agency.

Veronika Romanenkova: Thank you.

The year 2018 arguably went by under the sign of new national projects that you launched with the May Executive Order. They are expected to cost an enormous amount of money. However, some experts, members of the State Council, as was mentioned in Yalta only recently, have questioned the feasibility of these national projects and whether they are needed. How well thought out are the performance assessment criteria for the national projects? For example, the Accounts Chamber Chairman said that there is no way to assess their effectiveness. What can you say to counter this?

Vladimir Putin: I will have to begin by saying a few words on whether these projects are needed, since you said that some question this.

I have said it on numerous occasions, and I will repeat it today. We need a breakthrough. We need to transition to a new technological paradigm. Without it, the country has no future. This is a matter of principle, and we have to be clear on this.

How can this be done? We need to focus the available resources, find and channel them to the essential development initiatives. How can these efforts be organised? By simply distributing money, and that’s it?

First, we had to find this money. It took us the entire year 2017 to articulate the objectives and find the resources. Both the Government and the Presidential Executive Office contributed to this effort. By the way, when some call for more changes within the Cabinet, we have to understand that it was the Government’s financial and economic block that developed the national development programme to 2024. For this reason, they are the ones who must take responsibility for the plans they made. There is no way around it.

So how should this effort be organised? By simply distributing money? After all, as much as 20.8 trillion rubles are expected to go into the national projects alone, and another 6.5 trillion will be invested in a separate infrastructure development plan. Of course, the allocation of these resources has to be set forth in documents of some kind on achieving breakthroughs. You can refer to these development plans any way you wish. We call them national projects. After all, it makes it clear that there are goals that have to be achieved. If there are no objectives, you will never achieve the final outcome, no matter how you manage these investments. It is for this reason that the 12 national projects were developed alongside an infrastructure development plan. Let me remind you of the main vectors.

Healthcare, education, research and human capital come first, since without them there is no way a breakthrough can be achieved. The second vector deals with manufacturing and the economy. Of course, everything is related to the economy, including the first part. But the second part is directly linked to the economy, since it deals with the digital economy, robotics, etc. I have already mentioned infrastructure.

Why did we have this meeting in Yalta, Crimea, to discuss with our colleagues from the Government and the regions how we will proceed in these efforts? Because there are questions on how to assess performance under these projects. We need effective controls, while making sure that all efforts by the federal centre to monitor what is happening in the regions are effective. It is true that there are challenges in this regard, but we are working on them. So what is the tricky part? The tricky part is that funding mostly comes from the federal centre, and this applies to all programmes, while most of the efforts are undertaken in the regions. The regions must be ready to work constructively. Instead of simply hiking up prices in response to an increase in the available funds, they must focus on achieving concrete results that will be clearly visible. This is the first point I wanted to make.

Second, we need to understand whether they will be able to succeed. This is a real question. Some argue that this would be impossible. But this is what we hear from those who must deliver. Instead of having these thoughts they need to work on delivering on these objectives, and if they feel that they are unable to do so, they have to clear the way for those who are positive about their ability to deliver and are ready to work. To tell you the truth, I have not seen anyone who did not want to do it or said that it was impossible. These messages come from outside observers.

Without ambitious goals we will never achieve anything. For this reason, I do hope that the federal centre and the regions will be able to work together in a consolidated and positive manner. Yes, some indicators have to be adjusted. Our colleagues from the regions have submitted their proposals to this effect, and I have high hopes that the Government will take them into consideration and adjust specific indicators so that we can move forward effectively.

Pavel Zarubin: Rossiya TV channel.

I would like to expand on a topic that has already been raised. Many economics experts, including Alexei Kudrin, assert that in reality, the Russian economy has been growing just by one percent on average over the past ten years, and if so, this is essentially marking time, or stagnation. You set the goal of making a breakthrough, a leap, but for this, even if we take the lowest estimate, the growth rate should be at least four to five times higher. The Government promises to achieve the goal, but that same Government acknowledges that in the next few years, GDP growth rates will not exceed even 2 percent. In this regard, here are my questions: what does the Government rely on in its forecasts, in the planning of its work? Is a breakthrough possible at all, in this context, or will the economy continue operating like this: we make some money on oil surplus, put it aside, then spend it when there is a need for it? In general, are you satisfied with the Medvedev team?

Dmitry Peskov: Friends, I would ask you please to respect each other – ask only one question each.

Vladimir Putin: Look, economic growth has been one percent per year for a certain period of time. But, first of all, it was while Mr Kudrin was Deputy Prime Minister, so you must not blame the mirror for showing a crooked face, as they say. This is the first point.

The second is, one should not just count mechanically. I have great respect for Mr Kudrin, he is my friend and a good professional, and as a rule, I listen to his recommendations. He is a reliable specialist, a good one. But look, from 2008 to 2018, the economy grew by about 7.4 percent. In simple maths – yes, it equals one percent, a little more. However, let us not forget how the economy developed. There were higher growth rates, alternating with recessions associated with the global crisis. In 2009, after the crisis in the global economy, not in ours – Russia was not the cause of the global financial crisis of 2008–2009, it came to us from the outside – the decline was about 7.8 percent. Then little by little, we were crawling out of it for many years.

Then, in 2014–2015, another meltdown occurred – a collapse in the oil prices, our main exports. That is why I am saying we should not simply count mechanically.

However, of course, the country’s GDP, the GDP growth rate is one of the main indicators. But we will not be able to achieve the GDP growth rates necessary for this breakthrough unless the structure of the economy is changed. This is what the national projects are aimed at, and why such enormous funds will be invested, which I have already said – to change the structure and build an innovation-based economy. The Government is counting on this, because if this happens, and we should all work towards this, then the growth rates will increase and there will be other opportunities for development.

By the way, you mentioned the projected 2 percent growth for the next two years. Yes, in the next years, 2019–2020, two percent each, but from 2021, the Government is already planning 3 percent, and then more. Therefore, I strongly hope that we will manage to do all this. Some fluctuations are probably possible, but, I repeat, the most important thing is that we need… Do you see what we need to do? We need to join another league of economies, and not only in terms of volumes. I think that taking the fifth place in terms of volume is quite possible. We used to rank fifth in terms of the economy, in purchasing power parity, and we will do it again, I think. However, we need to ascend to another league in terms of the quality of the economy. This is what our national projects are aimed at.

Pavel Zarubin: Are you satisfied with the Medvedev team?

Vladimir Putin: Overall, yes.

Question: Good afternoon.

Mr President, in my city of Volgograd we had a wonderful year. We celebrated the 75th anniversary of the Battle of Stalingrad. You made it a federal holiday and we really appreciate it. You also paid us a visit.

We successfully hosted the World Cup and our region indeed began to breathe and develop.

There is a lot that still needs to be done. I think the economy will be extensively discussed. But Volgograd residents have a big wish and a great favour to ask. In 1998, the Kacha Higher Military Aviation School of Pilots, which had a very long history, was shut down.

It was established at the Tsar’s decree in 1910 and we were truly proud of it and want to be proud of it further. We want the military traditions to live on. Please consider re-opening it.

Vladimir Putin: In which year was it shut down?

Remark: In 1998, unfortunately. It had the Order of the Red Banner and a long history.

Vladimir Putin: You see, it is already 2018. It happened 20 years ago and I do not quite know what is left of this legendary school.

You are right, it was indeed a legendary school. But the Russian Defence Ministry plans personnel training resources based on whether there is a demand for specific types of personnel in the Armed Forces.

Therefore, we need to look at what can be done not only to remember it but perhaps to preserve the remaining traditions. I will make sure to look into this and consult with the Defence Ministry.

Maria Balyuk: Mr President, good afternoon. My name is Maria Balyuk, I represent the Prime news agency.

Mr President, the budget in the current year and the next year will have a surplus. However, starting January 1, a number of decisions are coming into effect that may cause a significant increase in prices of a wide range of goods and services.

For example, the VAT will increase to 20 percent, which has already triggered a two-stage increase in the housing and utilities rates next year. There is also the new tax for self-employed persons in pilot regions. Please tell us how these measures agree with the state’s economic policy.

Vladimir Putin: Housing and utilities rates in two stages, and what else?

Maria Balyuk: And, for example, a tax on self-employed people in pilot regions.

Isn’t this amount of new measures too much of a burden on Russians and the economy?

Vladimir Putin: You said about the surplus.

Yes, this is indeed a good indicator of the Government’s economic block performance. As I said in my opening remarks, for the first time since 2011 we will have a budget surplus of 2.1 percent. And this is good.

Let us not forget that as an oil producing country and a country that derives much of its revenue from selling oil and gas, we also have what is called a non-oil-and-gas deficit. This is what the country earns from selling products and services other than oil and gas.

Let me remind you that this non-oil-and-gas deficit was 13 percent in 2009, which is a lot. In the early 2000s, it was at about 3 percent, but the global economic crisis forced us to use our oil revenues to meet our social commitments and finance the Armed Forces, so we had to tap into the oil revenues.

In this situation, the non-oil-and-gas deficit surged into the double digits almost reaching13 percent, I believe. This was a very serious challenge for the Russian economy. We have now reduced it to 6.6 percent, and next year it is expected to decline to 6 percent and remain at this level for the next few years.

This is a very important indicator of economic resilience for the Russian Federation. Therefore, the increase in the VAT rate, among other things, is due to the need to maintain the non-oil-and-gas deficit at a certain level.

Second, in many countries VAT is 20 percent or even higher. It used to be higher in Russia as well, but we reduced it at a certain point. Now we have returned to a 20-percent tax rate.

However, the effective VAT rate for the overall economy will be below 20 percent since almost all benefits remain in place: for pharmaceuticals, children’s goods, and so on, including for IT companies. Many benefits have been preserved. With this in mind, the effective rate will be actually lower.

Finally, I do hope that the rate hike will be only a one-off measure with a possible slight increase in prices and inflation in the beginning of the year, after which the inflation will go down.

The Central Bank also seeks to prevent inflation from picking up. Only recently, the interest rate was increased by 0.25 percentage points.

While there are definitely both benefits and disadvantages to this decision, all this is done in order to prevent inflation and prices from growing. For this reason, I believe that the overall decision was correct and balanced, creating additional budget revenue and the possibility to deliver on our development plans as part of the national projects.

As for increases in housing and utilities tariffs, over the past years they grew by about 4 percent per year. It is true that next year there will be two hikes: the first one will be at about 1.7 percent, and the second one I think will be about 2.4 percent, but in total this still makes up 4.1 percent.

Why will the increase be spread out in two stages? The reason is that with a higher VAT, prices of some goods and services are expected to increase, and we need to make sure that the utilities sector does not come under stress.

For this reason, in order to shield companies in this sector from these developments and ultimately in the interests of the people, we decided to proceed in two stages. That said, the overall increase should not exceed 4.1 percent.

In some regions, where the utilities infrastructure requires major upgrades and bigger hikes are required, this can be done as an exception, and subject to federal Government approval.

Yekaterina Gagarina: Good afternoon, Mr President. My name is Yekaterina Gagarina. I represent the Rossiya TV channel in Novosibirsk.

The importance of the Akademgorodok 2.0 [Academic Town] project that you supported during your visit to Novosibirsk is obvious not only to Siberian scientists. This project is unique for the entire country.

But behind the technological component of this project there are a number of tasks of a similarly large scale. They include building housing, roads, kindergartens and schools. My question is what if our scientific ambitions crash at daily living problems? Will the scientists have somewhere to live?

Vladimir Putin: I would not want them to crash.

I understand that it is a very important part of the entire process. Of course, we will be working on this with the regional officials. When I visited Novosibirsk, I also spoke about this with my colleagues.

The first objective of the federal government is to honour its obligations related to the facilities which trigger the development of Akademgorodok – which, by the way, is the opportunity to earn money on these high technologies. The social component will definitely be carried out after this.

But if any additional action is required to resolve the scientists’ social issues, of course, we will try to do it. By the way, the mortgage sector has been growing lately. We will support it as well. It is growing very fast for everybody. The growth of the mortgage sector stands at over 20 percent.

But, of course, we will try to address these issues for Akademgorodok. If there is a critical need for a response from the federal government, we will discuss it.

Sergei Marov: Hello, Mr President. My name is Sergei Marov, Zvezda newspaper, Volgograd Region. I will start with small details and bring you to the bigger question.

I will give you a simple example. Next to our editorial office, there is a company which for nine years…

Vladimir Putin: A company?

Sergei Marov: Yes.

For nine years, it has been putting gigantic efforts into building a technological chain for full-cycle flax processing. Imagine…

Vladimir Putin: Excuse me, for the full cycle of processing…

Sergei Marov: Flax.

Vladimir Putin: I see.

Sergei Marov: From planting a seed to finished clothing. This is what they did.

It appears that the message from these industrial workers is clear. At the same time, when I was going to this conference, I had serious consultations with the company’s workers, and they said: “The last research institute dealing with flax is in the process of liquidation.”

The last training institute for executive personnel in the fibre flax cultivation is in the process of liquidation. We are receiving completely different messages from the industrial companies working on the product and from the government that is supposed to support these industries.

Therefore, I have a question. How do you assess the state of industrial production and its growth rate? Do you believe that at this stage the government provides sufficient support to Russian producers?

Vladimir Putin: Frankly speaking, I am not aware of the problems of this flax research institute. But in general, flax is one of Russia’s traditional industries. It has always been our signature product, our pride. I will look into this situation.

Usually the problem is worse than it appears from the outside. I just do not know the details of what is going on with that institute – although, of course, flax production, once again, has always been Russia’s pride. If the industry needs this institute, it may be preserved, but we need to understand how this can be done. I promise you to look into this.

Now over to industrial production. As I said, industrial growth in general is ahead of GDP growth at 3 percent. The processing industry has grown by 3.2 percent. This is a good performance indicator.

As concerns light industry, it is developing even faster. Over the ten months of this year, food production has grown by 13 percent, which is, by the way, confirmed by the consumption figures that are generally growing. Clothing and footwear industries posted a growth of 9 percent, a very good result.

Now, is government support sufficient or not? It is not. This is why we have mapped out a number of programmes to support specific production sectors. Overall, by 2024, this support will amount to 1.376 trillion rubles and will extend to the light industry, aviation, the defence industry and some other sectors.

We have individual programmes for major industries. Next year, they will receive 450 billion rubles in support. The year after, it will be 450 to 470 billion rubles. These are the indicators, the figures. The total funding stands at 1.376 trillion rubles.

Anton Vernitsky: Mr President, as Soviet-era children, all of us feared a nuclear war very much. As you remember, various songs dealt with this issue. One of them had the following lyrics: “Sunny world: Yes, yes, yes; nuclear explosion: No, no, no.”

Vladimir Putin: Are you not afraid today?

Anton Vernitsky: Forty years have passed, and major media outlets on both sides of the ocean are beginning to publish a scenario for a nuclear exchange between Russia and the United States. The word “war” is sounding more and more often at household level, in kitchens.

Mr President, how can you calm down my little son who, just like me, also fears a nuclear war today? What words and actions can calm us all down?

Vladimir Putin: You know, I think you are right.

I just thought that all this, including the danger of such developments in the world, is now being hushed up and played down to some extent. It seems impossible or something that is not so important. At the same time, if, God forbid, something like this happens, it might destroy the whole of civilisation or perhaps the entire planet.

These issues are therefore serious, and it is a great pity that there is such a tendency to underestimate the problem, and that this tendency is probably becoming more pronounced. What are the current distinguishing features and dangers?

First, all of us are now witnessing the disintegration of the international system for arms control and for deterring the arms race. This process is taking place after the United States withdrew from the Anti-Ballistic Missile (ABM) Treaty that, as I have already noted a thousand times, was the cornerstone in the sphere of non-proliferation of nuclear weapons and deterring the arms race.

After that, we were forced to respond by developing new weapons systems that could breach these ABM systems. Now, we hear that Russia has gained an advantage. Yes, this is true. So far, the world has no such weapons systems. Leading powers will develop them, but, as yet they do not exist.

In this sense, there are certain advantages. But, speaking of the entire strategic balance, this is just an element of deterrence and for equalising parities. This is just the preservation of parity, and nothing more.

They are now about to take another step and withdraw from the INF Treaty. What will happen? It is very difficult to imagine how the situation will unfold. What if these missiles show up in Europe? What are we supposed to do then?

Of course, we will need to take some steps to ensure our safety. And they should not whine later that we are allegedly trying to gain certain advantages. We are not. We are simply trying to maintain the balance and ensure our security.

The same goes for the START III Treaty, which expires in 2021. There are no talks on this issue. Is it because no one is interested, or believes it is necessary? Fine, we can live with that.

We will ensure our security. We know how to do it. But in general, for humanity, this is very bad, because this takes us to a very dangerous line.

Finally, there is another circumstance I cannot ignore. There is a trend to lower the threshold for the use of nuclear weapons. There are plans to create low-impact nuclear charges, which translates to tactical rather than global use. Such ideas are coming from Western analysts who say it is okay to use such weapons. However, lowering the threshold can lead to a global nuclear disaster. This is one danger we are facing today.

The second is the use of non-nuclear ballistic missiles. True, our US partners seem to have dropped this idea, but it still exists. What does it mean?

Suppose, a ballistic missile is launched, nuclear or non-nuclear. The missile attack warning system identifies the launch and the launch site, and, seconds later, determines the flight path and the possible warhead landing area. This is all on the verge of a possible error. It is terrible, and we cannot take it that far. Nevertheless, such an idea of using non-nuclear ballistic missiles exists.

Suppose, a submarine fired a ballistic missile from the World Ocean, but who the hell knows if it is nuclear or not, go figure. This is very dangerous. All of that is being widely discussed, which is dangerous.

However, I believe humanity has enough common sense and enough of a sense of self-preservation not to take these things to the extreme.

Dmitry Peskov: Let us go to this sector. I see the Ukrainian flag in the second row.

Vladimir Putin: You attend all our news conferences, correct? You are from Ukraine?

Dmitry Peskov: Yes, he is our colleague from Ukraine.

Vladimir Putin: Right, my colleagues told me it was better not to let him speak, because he would cause a scandal. Are you going to cause a scandal now?

Please go ahead.

Yegor Sozayev-Guryev: Yegor Sozayev-Guryev, Izvestia. My question is about the incident in the Kerch Strait.

Vladimir Putin: But Izvestia is not from Ukraine, is it?

Yegor Sozayev-Guryev: Well, my question is about Ukraine.

Vladimir Putin: Well, go ahead.

Yegor Sozayev-Guryev: I have a question about the precedent in the Kerch Strait, I wonder about the future of the captured Ukrainian military. What will happen to them? Do you think this provocation was a success?

I cannot help asking about the citizens of Russia imprisoned in the United States. I mean Butina and Yaroshenko. How can Russia protect their rights? Perhaps, we should look at our Chinese partners? A Chinese citizen representing Huawei was detained in Canada. In response, they detained several Canadian citizens. Perhaps, we could learn from that experience?

Vladimir Putin: With regard to your first question, you said: “Do you think this provocation was a success?” First, let us state that it was a provocation, and you agree with that. This is already a good start.

Now, whether it was a success or not, I believe provocations are a bad thing whatever way you look at them. Provocations seek to aggravate things. Why do our Ukrainian partners need things to go that way? Clearly, they are in the middle of an election campaign right now, and they want to aggravate the situation in order to raise the ratings of one of the contenders, I mean the incumbent president and the current government. Well, this is bad, it is ultimately bad for the interests of the Ukrainian people and state. However, it is possible to move forward without any provocations and do so calmly, as before.

Whether it was a success or not, I mean in terms of improving popularity ratings, maybe it was, as Mr Poroshenko’s ratings seem to have increased a little and he has moved from the fifth position to the second or third, where the figure fluctuates around 12 percent. Ms Tymoshenko, I believe, has 20 percent or even more, whereas Zelinsky, Boyko and Poroshenko have around 12 percent each. In this sense, yes, he probably achieved the goal. At the expense of the country’s interests, I believe. This is a bad way to boost ratings.

With regard to the future of the Ukrainian servicemen, they were sent on this mission and some of them were expected to die in the process. I can see that the leadership is very upset by the fact that no one died. They expected some of them to die. Thank God, this did not happen. An investigation is underway. Once it is over, we will know what to do with them.

Still, I will ask you to give the microphone to our colleague from Ukraine.

Roman Tsymbalyuk: Thank you. There will be no scandal. There never was a scandal actually.

Vladimir Putin: Thank God.That already is good news.

Roman Tsymbalyuk: Mr President, I would like to ask you how much money you are spending on the occupied Donbass? Under your leadership, people there are living in poverty. Let us face it, they have become slaves to Russia. You are concerned about the threat of a nuclear war and at the same time, you are preparing for a war against NATO, and, in fact, you are shooting at Ukrainian citizens. It was you as the Supreme Commander-in-Chief who issued the order to open fire at seamen. My question is what are the terms of the exchange?

And a question about the elections, if I may. You say that you analyse the approval ratings.

Vladimir Putin: Just a second. Terms of exchange?

Roman Tsymbalyuk: The terms of exchange of Ukrainian political prisoners and Ukrainian servicemen. You do need your Russian citizens back, don’t you?

And about the elections, if I may. You constantly analyse the ratings and one gets the impression that…

Vladimir Putin: I do not analyse them, I look at them inasmuch as you print them.

Roman Tsymbalyuk: … in this way you are meddling in the electoral process like you did in the United States. Doesn’t it seem to you that a direct dialogue between the presidents of Ukraine and Russia will never take place until you change your job?

Thank you.

Vladimir Putin: Regarding the suffering of the people who live in Donbass. You are a Ukrainian citizen, aren’t you? And you consider the people who live on this territory to be the citizens of your country. Can you tell me who established the blockade between Donbass and the rest of Ukraine? Did Russia do it? The Ukrainian authorities did it: they imposed a total economic blockade of the territory they consider to be their own. They shoot at the people they consider to be their own citizens. People are killed there almost every day, peaceful civilians, by the way.

We do render humanitarian and other assistance and support to the people who live on that territory. But we do it only to prevent them from being finally crushed, devoured and torn to pieces, and we will continue doing it. Because attempts to solve these political issues by force – and we have seen this being done by the current Kiev authorities for several years – are doomed to failure. This has to be kept in mind.

Now concerning how to settle these relations and who will and will not remain in power. It is not about personalities, it is about the attitude towards people. We want to see peace and prosperity on the entire territory of Ukraine, including Donbass. We are interested in it because Ukraine remains one of our biggest trade and economic partners.

Trade between Ukraine and Russia, in spite of all the efforts of the current Kiev authorities, is growing, it has grown in the outgoing year, it has grown during the current year. Is it strange? No, it is not strange because these are natural ties. These natural ties will sooner or later make themselves felt. But as long as the Kiev corridors of power are peopled by Russophobes who do not understand the interests of their own people this abnormal situation will persist. Regardless of who is in power at the Kremlin.

We have attended to the issue of exchange all along. Mr Medvedchuk, on instructions from Poroshenko, by the way, has been constantly engaged in this. He came to Moscow just recently and raised the issue of the release of Ukrainian servicemen detained in the Kerch Strait, in the Black Sea to be more precise. Yes, Medvedchuk raised this issue. However, as I have said, these issues could only be tackled after the criminal case is closed.

Margarita Baulina: Good afternoon, colleagues, Mr President. My name is Margarita Baulina, I am from the Family, Society, Traditions publication.

Two years ago, a group of activists from my paper decided to take part in a social project to build a covered football pitch for disadvantaged children, as well as for kids from children’s homes.

For two years, we have been knocking on the doors of various committees, writing letters, holding meetings and still everybody is totally indifferent to our cause. I do not want to speak ill of my colleagues from other professional fields, but we are treated like we want to open a flower shop or a gas station, and nobody pays attention to the fact that we want to help the state perform its functions and carry out an important mission.

Vladimir Putin: Sorry, I did not understand you: what are you trying to do?

Margarita Baulina: We are trying to open a covered football pitch for disadvantaged children and children from children’s homes, to give them an opportunity to fulfil themselves for free, to find their true identity not in the streets through some harmful activities.

Vladimir Putin: Do you have a non-governmental non-profit organisation established, or what?

Margarita Baulina: We are registered as a limited liability company on the base of our publication.

Vladimir Putin: So it means this is a business?

Margarita Baulina: Currently, yes, because we cannot find other ways to implement our project.

Vladimir Putin: Who have you addressed?

Margarita Baulina: We are trying to address this issue with several committees in out city, such as the Property Committee, Sports Committee and the Committee for Youth and Social Policy. And each time we go from one committee to another, and exchange letters with them, etc.

Vladimir Putin: How much does your project cost?

Margarita Baulina: At the moment we need 11 million rubles.

Vladimir Putin: What was your city again?

Margarita Baulina: St Petersburg.

Vladimir Putin: I will speak with the Acting Governor. I am sure we can solve this problem.

Margarita Baulina: Thank you very much.

Vladimir Putin: Yes, I am sure.

Kseniya Golovanova: Congratulations on Counterintelligence Day, Mr President. This is observed today.

Vladimir Putin: Thank you and the same to you. I feel that you are quite closely connected to this sphere…

Intelligence, counterintelligence and information work are all the same. At the end of the day, they are all about information: you work with information, and so do the special services.

Kseniya Golovanova: Russian society, especially its younger part, have recently witnessed strange actions by the authorities that I believe can cause unnecessary conflict. One example is the case of the rappers – I think you are already familiar with this word. They come under pressure, with crackdowns on their concerts.

Vladimir Putin: Are you questioning my competency?

Kseniya Golovanova: Not at all.

Vladimir Putin: You said, “I think you are already familiar with this word.” Well, I knew it even before.

Kseniya Golovanova: Well, you tend to use it more often now.

Vladimir Putin: There were rappers among my authorised representatives. Take Timati, for example. Just look at this spectacular guy. By the way, he is a wonderful person and a brilliant artist.

Kseniya Golovanova: During the meeting of the Council for Culture, you said that if you cannot rein in a movement, you have to become its leader. Could you tell me why the state has to have a role in all this? Why not just leave it alone? Why did the people have to be dispersed? Who needed it? So they use obscene language in their songs – let them be.

There is a second question I wanted to ask that also deals with young people. A lot of people have recently voiced their misgivings over a legislative initiative on introducing tighter responsibility for negative statements regarding the state and authorities. This will also primarily target young people on social media. Aren’t you afraid that these initiatives could cost you their support?

Vladimir Putin: Let me start with the question on alienating young people or attracting them.

You know, in any discussion about the youth, I always remember ceratin tragic and heroic chapters from our recent past. Do you remember the airborne squadron of 96 young lads, 19 or 20 years old, who found themselves in the Armed Forces almost immediately after graduating from school? These 96 soldiers fought against 2,000. Only six survived. They fought for almost three days, at times fighting at close quarters, with shovels and knives. They are heroes, and they were young, 19 or 20 years old (Applause).

Take volunteers, for example. There are thousands and thousands of them. I think that as many as 35,000 worked at the World Cup. And what about those involved in battlefield archaeology? There are thousands of them as well. They are all young people.

People of this kind form a very substantial social stratum, a large social group. They are all young, they are the foundation of Russia’s present and future. There are also young researchers, talented artists and musicians, including rappers.

As for responsibility for desecration of the flag or other state symbols, it exists in almost every country. People must respect their country. There are rules that must be respected everywhere. If there is responsibility offline, it must also exist online.

In what way does online behaviour differ from offline activity? After all, these are still social interactions, especially since the internet has penetrated all areas of our lives. For this reason, there is nothing extraordinary about it.

As for these rappers being detained, I agree with you. This does not make any sense and brings about the opposite effect to what was intended, leading nowhere. That being said, there is nothing good in what you said about letting people use obscene language and not paying attention to it.

Recently, as you must have seen, I attended Yury Temirkanov’s birthday celebration; he turned 80. He said something very common and still absolutely correct: “Art does not exist to indulge base motives, base interests and low cultural profile. Culture is there to raise the level of those things.”

Of course, this is not something people should be caught, restricted or punished for. This would be wrong. But there are other things. For example, remember, I did not know it was broadcast live, where I told my interlocutor: “Let us all use foul language here at the Council on Culture meeting.” Everyone laughed. Why? It never occurs to anyone to do this. Why should we condone it? No, we should not do this.

But there are other elements. For example, drug propaganda. Do we want our young people to use drugs? Why should we condone the promotion of drug use? This is a degradation of society, a degradation of young people, and a degradation of the nation.

Do we want to degenerate? Someone wants to promote drugs – so let them. But we should not do this, and in no way should we encourage it, and we should not turn a blind eye either. Only, we need a different way of dealing with these trends.

Another example: it has become trendy to promote suicide among young people. So what do you say, let’s go now and hang ourselves, or what? Then you go first, not me. You do not want to, right? This cannot be allowed in the youth environment. That is what I said – you take the lead.

This is different from catching, restricting or telling someone to ”do as I do.“ No, this is not aviation. Here you have to act differently. Are there any different methods? Of course there are. We need to carefully and calmly build our case, convince people of the greater appeal of other values. But you cannot ban it outright, I agree with you.

Dmitry Peskov: Are there, in addition to the Ukrainian media, media representatives from other countries as well? Our Japanese colleagues from Kyodo Tsushin in the middle of this centre section, please, take the floor. Please, pass the microphone there.

Hirofumi Sugizaki: Good afternoon, Mr President.

Vladimir Putin: Good afternoon.

Hirofumi Sugizaki: Hirofumi Sugizaki,Kyodo Tsushin, Japan.

It is natural that my question is, unfortunately, about the peace treaty that, as I understand, our countries are seeking to sign. After your meeting with Mr Shinzo Abe in Singapore, where you agreed to push the negotiating process forward on the basis of the Soviet-Japanese Declaration of 1956, our public’s only concern is about how many islands we are going to get: nil, two, three or four – we do not know. On the other hand, as I understand, the Russians are also puzzled, as they mainly ask questions like, “Why should we return them?” Some people even approach us with a threat: “We will not yield an inch of our land.” And so on. The question is about the delimitation that we must carry out. But if our new treaty – a peace treaty – is confined to the delimitation of borders, this will not be enough and will not be interesting to our nations, and people will not understand this. What new idea do you think should be embedded in a treaty to bring our relations to a new level?

There is another question that I cannot fail to ask in connection with the above. Russia – and you yourself – has brought up security issues recently, I mean the deployment of the US missile defence system in Japan and the possibility of deploying American troops and military infrastructure on the islands should they be transferred to Japan. We are holding negotiations at an expert level, but in military matters Japan almost fully depends on the US. Do you think these issues can be resolved on a bilateral basis, or will you have to deal directly with the US? Thank you very much.

Vladimir Putin: Let us talk about the final part of your question so that we do not forget what you said. The issues of security are crucially important, including when signing a peace treaty. You spoke about the deployment of the US military infrastructure in Japan, but it is already there, the largest US base is in Okinawa, it has been there for decades, as we know.

Now, about Japan’s ability to take part in this decision-making. To us, this is an unclear, closed issue. We do not understand the level of Japan’s sovereignty in making such decisions. You know better than all other colleagues, and I know too that the Okinawa Governor is opposed to some decisions related to improving and expanding the base. He is against it, but he cannot do anything about it. People who live there are also against it.

There is a lot of evidence of that; there have been opinion polls and protests demanding the withdrawal of this base. And, in any case, they are opposed to strengthening the US Air Force part of the base that is there. There are plans to improve and expand it, and it is happening despite the fact that everybody is against it.

We do not know what will happen after the peace treaty is concluded, but without an answer to this question it will be very difficult to make any crucial decisions. And, of course, we are concerned about the plans to place ABM systems there. I told the United States this many times and I will repeat again that we do not consider this to be defensive weapons; this is part of the US strategic nuclear potential placed outside. And these systems, they are synchronised with the missile strike systems.

So there are no illusions and we understand everything. But nevertheless we are sincerely striving and will strive to sign a peace treaty with Japan. It is because I am confident, and Prime Minister Abe shares my confidence, that the current state of affairs is not normal. Both Japan and Russia are interested in a complete settlement of our relations, and it is not only because we need something from Japan in terms of the economy. Our economy is more or less developing.

Just this morning, Economic Development Minister Maxim Oreshkin reported on his trip to Japan. There is some progress, including an agreement on deliveries, on opening the Japanese market to Russian meat and poultry products. There are other improvements as well. Therefore, we are moving forward, and will continue to move forward, as it will be necessary. But the normalisation is important to us, both for Russia and Japan. It is a difficult process, but we are ready to move forward together with our colleagues.

Dmitry Peskov: Thank you. As you may know, British media regulator Ofcom has just found RT guilty of violating broadcasting regulations and is looking into the possibility of introducing sanctions against it. I saw an RT correspondent somewhere here. Let us give him the floor, as he is the main source of such information.

Vladimir Putin: Yes, please.

Ilya Petrenko: Thank you, Mr Peskov.

Good afternoon. My name isIlya Petrenko from the Russia Today television channel.

But I have a different question. First, I would like to inquire about a recent decision to simplify procedures for the people of Ukraine to obtain Russian citizenship. Our channel often dealt with this issue, as well as with bureaucracy. It goes without saying that this is an important step, but I would like to ask you to explain the logic of this from a purely political standpoint. If this is so essential, and if this is needed to help people in eastern Ukraine, why didn’t we do it earlier? Are you not afraid that bureaucracy will persist, and that papers will, from now on, be placed to the left, rather than the right?

I would also like to come back to the question from my Izvestia colleague. There is the Skripal scandal and the Western response to it. Jamal Khashoggi, a Saudi Arabian journalist, was murdered, and this incident caused an entirely different response. Kirill Vyshinsky and Maria Butina, as well as Huawei Chief Financial Officer were arrested. And Donald Trump is saying openly that sheis a bargaining chip in a trade war. My colleague wanted to know if we would ever see this happening in Russia, when foreign citizens would be arrested under far-fetched pretexts and exchanged for someone else. Thank you.

Vladimir Putin: Let us start with the last part of your question. I do not want to comment on US-Chinese relations, who arrested whom and for what actions, etc. This is a very sensitive area, and we will not act according to the laws of the Code of Hammurabi here. The law of retaliation states, “An eye for an eye or a tooth for a tooth.” We need to act very cautiously here, and we need to be real. We will respond if certain people violate Russian legislation, regardless of their national and state affiliation. But we will not arrest innocent people simply to exchange them for someone else later on.

As for the fate of Russian nationals, we do care about them, including the fact that Butina is being forced to admit something over there. I cannot understand what she could possibly have admitted, since she was not following any instructions from the Russian Government or its agencies. I am saying this because I mean it, no matter what she says under the threat of being sentenced to 12 or 15 years in prison. It is understandable that together with her lawyer she is fighting to get out of prison. I do not quite understand why they put her there in the first place. There were simply no grounds for it. But now this is a question of saving face for them and finding a way out. I am primarily referring to the US justice system. We will see how it plays out. We do care, and we will keep an eye on this case and provide our support accordingly.

As for the Skripals and Khashoggi, no comment is required. Khashoggi was obviously murdered, and everyone acknowledged it. Skripal is alive, thank Heaven. Nevertheless, Russia was slapped with a salvo of sanctions in this connection, with no end in sight, which contrasts with complete silence in the second case. This is a politically-driven, Rusophobic approach. It serves as a pretext for attacking Russia once more. Without the Skripal case, they would have come up with something else. This is quite obvious to me. Their only goal is to contain Russia and prevent it from emerging as a potential competitor. I do not see any other end to it.

Regarding red tape on citizenship matters. You said “red tape.” How so? Red tape is perennial. You cannot defeat it. At the same time, you cannot live without it either, and this has to be said as well. It is true that there must be rules for this bureaucracy and governance mechanisms, etc.

Regarding naturalisation, this does not have to do only with what is taking place in southeastern Ukraine. Our initiatives do not target exclusively people living in these territories. The Government is currently working on amendments to the relevant law on citizenship and naturalisation. What for? These efforts are designed to show that we do not seek and will not support policies of division or the ones designed to alienate the peoples of Russia and Ukraine. What are the current [Ukrainian] authorities doing? What is their mission? What are they trying to achieve on the back of Russophobia they are promoting? They are practically admitting that they are pursuing a historic task of separating the peoples of Russia and Ukraine. This is what they are up to. And for that, they can get away with anything.

Your colleague from the Ukrainian media talked about the challenges faced by people living in Donbass and the Lugansk Region, and their poor living standards. But is it any better in Ukraine? The situation is quite similar compared to Donbass, and it is getting worse all the time. Anything can be forgiven within the country, and even more so outside it against the backdrop of war, hostilities and tensions. And they are getting paid for this. They are about to receive another IMF tranche. We do understand what this is all about: just enough to pay out pensions and salaries to social sector employees, and the future generations will have to foot the bill. For this reason the overall situation is quite unfavourable. I believe this to be the case for the economy, society and domestic political processes. But our nations are very close and share the same history, so we will do everything to move in this direction.

The law on citizenship is currently being amended, and it will be adopted in early 2019.

Yury Abumov: Yury Abumov, Khakassia newspaper.

Mr President, I would like to ask about the latest regional elections. It is no secret that in some regions, they were quite turbulent and tense, and sometimes even long, like in Primorye, where they have just ended, and Khakassia actually set a record of holding elections that went on for two whole months.

But the most important thing is that, as a result of the protest vote, opposition parties’ candidates won. In particular, a candidate from the Communist Party won in Khakassia, and candidates from LDPR won in Khabarovsk and in Vladimir Region. This raises some questions.

First, why do you think this happened? Second, why, contrary to the tradition you established, have you not met with the elected regional heads yet? And most importantly, how do you intend to build relations with the regions where the opposition parties won? Because there are concerns that the federal Government may cut their funding and support – there are such fears.

Vladimir Putin: Do not worry about it. It is strange that this question even occurred.

About the meetings. The elections in Vladivostok were held just last Sunday, and that is why there were no meetings. They will be, and they are scheduled for next week, I believe. We will have the State Council meeting, and, I have already instructed the Executive Office to schedule a separate meeting with the newly elected heads of the regions you have just mentioned. We had to wait for the voting results in Vladivostok. This is the first point.

Second. This is not the first time that representatives of opposition parties win elections, is it? For several years now, an LDPR representative has been heading Smolensk; in Omsk, there is someone from United Russia, I think, and in other regions, there are representatives of the Communist Party. So what? They are working; everything is fine.

I am not a member of any party. True, I created the United Russia, but the President is not a member of any party. And the main thing for me is that people in the cities and regions of the Russian Federation feel that life is changing for the better.

In fact, if they cast their vote for a specific person who does not represent the United Russia party, that is their choice. I will help in every way any elected leader of the region.

The only question is that the newly elected heads of regions themselves should rise to the challenge, should be able to fulfil the electoral promises they made to the people.

Yelena Glushakova: My name is Yelena Glushakova, and I am from RIA Novosti.

Vladimir Putin: Good afternoon.

Yelena Glushakova: I have also brought a picture, Masha and the Bear, that relates to the topic of my question. As my colleagues have said, Russia has been living under a huge amount of the most varied sanctions for the past few years. It can be hard to keep track at times, and, in some cases, they are vowing to introduce sanctions against cartoon characters.

But this is beside the point. My question is more serious. They are planning to introduce even more serious sanctions; for example, US lawmakers are preparing for this. And is Russia prepared for a new round of sanctions escalation? Does the Government have any plan for minimising their impact on the Russian economy? And what do you think the impact is, all the more so given the widely differing views expressed on it?

Vladimir Putin: Well, we have discussed sanctions many times. If you want to discuss this issue once again, that is okay with me.

Throughout virtually its entire history, Russia has faced various restrictions and sanctions. Really its entire history.

If you look at the history of the 19th and 20th centuries, you will see that the situation is always the same. You can read diplomatic correspondence dating to the 19th century and the early 20th century. Everything is the same. They urged Russian diplomats to quickly establish order in the Caucasus and to do many other things. Nothing changes.

How can this be explained? I have already discussed this, and I hope that an overwhelming majority of today’s audience also realises that it is related to Russia’s growing might and its greater competitiveness. A mighty and powerful player is emerging, one that has to be reckoned with, even if others would rather not.

Quite recently, they believed that a country like that no longer existed, but it turns out it does and it must be reckoned with. Our country has a population of 160 million. This is not just some wishful thinking on the part of its leaders, it represents the interests of the people that we are defending. By the way, we are carefully defending these interests with calm and restraint, nothing boorish. But we are going about our business, and we will continue to move in this direction.

Speaking of present-day sanctions, they have just mentioned the Skripals and Khashoggi incidents. So, is there any logic here? No, there is none. This is just a pretext for taking additional action to contain Russia.

Our economy, as it has been said many times, has adapted to these external restrictions. Look, in the beginning of this meeting I mentioned that after the 2008−2009 global crisis, our GDP dropped by 7.8 percent. There were no sanctions at the time. After the sanctions were imposed in 2014, the drop was 2.5 percent.

You asked how we assess this situation? We always assess it in our favour. But let us look at how our opponents see it – those who impose the sanctions. For example, the US Treasury Department believes that this 2.5-percent drop in 2015 was one-third due to the sanctions and two-thirds due to the collapsed prices on energy sources, mainly, oil. In fact, I think that one-third is too much. But all, right, they did affect our GDP.

The sanctions also affect those who introduced them. According to the European Parliament, the European economy lost around 500 billion euros due to the sanctions against Russia because they lost our market, they under-export and they under-import certain goods from us. The number of jobs has dropped.

It is significant for them because many EU countries suffer from a very high unemployment rate. In Spain, if I am not mistaken, it is still around 15 percent. We have 4.8 percent and they have 15 percent, you know. And the development of global trade, which lost over 400 billion, is also a result of such an unpredictable policy, including sanctions. This policy is harmful to everybody.

I will repeat once again, our economy has adapted to this. Yes, there are some adverse effects but look, there are also positive sides to these sanctions. What are they? The sanctions made us switch on our brains in many areas and Western experts also acknowledge this. The share of Russian transport machine building was 98 percent in 2017. Automobile production accounted for 85 percent. Several other industries, also key areas, accounted for around 80 percent.

This year, we spent 600 billion rubles on import substitution, including 125 to 128 billion from the federal budget. I will not even mention agriculture. We had to compensate for the imports in the market. Yes, unfortunately, this resulted in a short-term price increase in the domestic food market but right now, the prices have stabilised to a large extent in this sector of the economy and agriculture has made a breakthrough that we could not have ever imagined.

Since 2000, the amount of exports has increased 16-fold, which is just unbelievable except it is actually happening. There are negative and positive sides but in any case, we would like the world economy to develop without any shocks, unlawful measures or external restrictions, to develop naturally, for its own benefit.

Dmitry Peskov: Now, to our respected regional media. Chelyabinsk, please.

Vladimir Putin: Wait a second. I see a poster saying ‘KGB and children.’ Today is December 20, the day of the Cheka. What do you mean, there are children in the KGB? What is it? Please, hand them a microphone.

Remark: As my good friend said once, “We all are the children of the KGB, but life has taught us different things.”

Vladimir Putin: If you are the children of the KGB, why does life teach you? The KGB should do that.

Question: Mr President, society strongly demands social justice. According to Levada Centre, 66 percent of respondents feel nostalgic about the Soviet Union. And here is my question: do you think that a restoration of socialism is possible in Russia?

Vladimir Putin: I think this is impossible.

I believe that the deep changes that have taken place in our society make restoring socialism in the sense you mean impossible.

There can be social elements in the economy and the social sector, but expenses will always exceed profits, and as a result, the economy would be at a dead end.

But the just distribution of resources, the fair treatment of people who live below the poverty line, and a state policy aimed to lower the number of people who have to live like that, to provide the majority of people with healthcare services and education in acceptable conditions, if this is the socialism we are talking about, we are holding to the very same policy. Our national programmes that we talked about in the beginning of this meeting, are mostly aimed at all this.

Dmitry Peskov: If it is not about the KGB then please go ahead. You are from Chelyabinsk, aren’t you?

Yana Skonechnaya: Thank you.

My name is Yana Skonechnaya, I represent the Southern Urals State Television and Radio Company, the city of Chelyabinsk.

I have a question that concerns not only Chelyabinsk, but all of Russia. I am talking about waste management, waste sorting, in particular. Not a single city in our country has either the industry for separate trash collection, or a culture of waste sorting. I have a colleague who does separate trash collection, but her entire apartment is filled with trash bags, because she needs to collect a certain amount of it, then load it into her car, take it to the other end of the city and only then dispose of it. Of course, some regions have already begun building the appropriate infrastructure, but this is all a drop in the ocean. You raised this issue on many occasions. So why is it so hard to make it happen? Why can we not use international experience and have our waste properly recycled?

Thank you.

Vladimir Putin: You know, the answer is fairly simple. The situation is complicated, but the answer is simple – we have never dealt with it. For decades, since Soviet times, we have been dumping garbage in pits, to put it colorfully. No one has ever engaged in its processing, unless minimally in certain areas, while we produce, I believe, 70 million tonnes of trash annually, and there is no place to dispose of it. The amount of waste tends to increase with the development of industry, including the development of the consumer goods industry. As chemistry progresses, the amount of plastic trash increases. In the Pacific, there are entire islands of it the size of France and several metres thick. Plastic tends to accumulate in these spots and there is nothing you can do about it. However, this is the Pacific, while we dump it all in landfills.

We need to address several key and top priorities. First, we need to eliminate illegal landfills. Second, we should create a waste treatment industry. What your colleague is doing is great, and is highly commendable, but this is a problem for environmentally conscious people. The state, first of all the regions, and then the municipalities, should create conditions for separate trash collection and subsequent recycling. I understand the people who oppose the construction of waste disposal plants. You have just mentioned international best practices. It is necessary to use them in our country. We often manage to do so. Here, we need to do the same. Some environmentalists and even some citizens object to building even waste incineration plants in the regions. These plants need to be of high quality and efficient, so as not to have to scrimp on the filters for them. They are the most expensive part of the processing and incineration plants. Everything has be done according to the corresponding technology and methodology.

In Tokyo (as our colleague will confirm, I think), waste incineration plants are located in central parts of the city. There is no smell, no problems whatsoever, because the process is adhered to. We need to do the same. We must build 200 waste treatment plants before 2024. I am not sure this will be enough, but we must have at least 200 such plants in our country.

Alexander Ilyin: Alexander Ilyin, Yakutia newspaper.

Mr President, my question is this. The Crimean Bridge has become a symbol of Crimea’s return to its homeland. The bridge over the Lena River can become a symbol of the development of Russia’s Asian part. I would like to ask you, should we expect this bridge to be built? If so, when? Because the Yakut people really need it. Thank you.

Vladimir Putin: I see. A symbol is always good; it is always a landmark of some stage of work that has been completed and a springboard for further progress. In this sense, the Crimean Bridge is both. I agree with you: it is both a symbol of Crimea’s reunification with Russia, and an opportunity for the peninsula’s development. It opens opportunities for development. It is very important.

The same applies to the bridge across the Lena River. You said it has to spur development. This needs to be calculated carefully. The cost of this project – and we have been talking about it for a long time, for several years – is very high. It is an expensive project. We need to look if it will simply stop at the city and that is it, or if there is a possibility of developing the region as a whole, the area on the other side of the Lena River: the local economy, infrastructure, access to mineral deposits. Here is what we need to decide. We need to match the costs against the end result for the economy of the region as a whole. If our colleagues at the Transport Ministry and the Economic Development Ministry agree, then of course we will implement this project.

Vladimir Putin: Let us go on. Nature, Motherland, people.

Remark: (From the audience.) We will soon run out of gas.

Vladimir Putin: We will talk about gas in a moment. We will not run out of gas. We have more gas than the rest of the world. We have 67 trillion cubic metres in Yamal alone.

Go ahead, please.

Sergei Lisovsky: Mr President,

Thank you for the opportunity to ask you a question. Sergei Lisovsky, editor-in-chief of Society and the Environmentnewspaper. I have been publishing it in St Petersburg for 19 years now. Next year it will turn 20 – the oldest environmental newspaper in Russia, steadily published. Small but steady.

Vladimir Putin: We will celebrate.

Sergei Lisovsky: That is what I wanted to say, before asking a serious question, I would like to invite you to St Petersburg to attend a roundtable discussion on Russia’s development strategy, on the occasion of the 20th anniversary of Society and the Environment.

My question is as follows. We are working on the protection of the Neva River, the protection of forests, water resources, the protection of the Don River… And thank you so much for issuing instructions at the Russian Popular Front’s media forum on April 23 to report to you on the construction of the Bagayevsky hydroelectric dam, this dangerous facility the local residents are opposing.

Mr Kiriyenko at the RPF congress told me that your instructions remain in force. But local officials are reluctant to comply with them. Therefore, I would like to ask you to pay attention to the Don River – this is as great a Russian river as the Volga and the Neva. This is my first point.

And second, Mr President.

On December 15, you chaired a meeting of the Council for Culture [and Art] at the Constantine Palace. All the questions asked there were very good and correct, including about drug addiction. But Andrei Mikhalkov-Konchalovsky asked one of the key questions, and I would like to follow up on this issue after thinking it over.

He said that Russia now lacks an ambitious national development idea. The Russian Empire had the following triad: Orthodox Christianity, autocracy and nationality. The Soviet Union had the moral code of the builder of communism. Today, it is unclear what kind of society we are building, but it looks more like the amoral code of the builder of capitalism.

I came up with a triad of my own, and I would like to ask you to get our federal television channels, including Channel One, NTV and Rossiya, to hold a nationwide discussion of what kind of country and society we are building, after all. So, I suggest the following triad: nature, motherland and the people. Its three component – nature, motherland and the people – cannot exist without one another. And that is why we now watch shows about who left whom and who cheated on whom. That is, there is a kind of media lawlessness. And if we raise the issue of all television shows …

Dmitry Peskov: What is your question, please?

Sergey Lisovsky: Yes, is it possible to create a television show on strategically important issues related to Russia’s long-term development?

Vladimir Putin: It is always very interesting to speak with Andrei Mikhalkov-Konchalovsky. He is very insightful. He has his own opinions, which he is not afraid to express, whether you agree or not. He is not a conformist, and he speaks his mind. He is an insightful person.

I have repeatedly discussed whether we have an idea for building the state, the country – the foundation on which to build. I believe that patriotism in the best sense of the word, rather than the basest, simply has to be the foundation for strengthening our state in the broadest and noblest sense of this word.

As for our many channels on television and online that probably are not worth the air time they take up, you know, Daniil Granin (I believe that I mentioned this some time ago) discussed the matter at our last meeting.

We had a long private conversation, and I never saw him again, he passed away some time later. He said: “Look, you have to do something about this.” I asked: “What are you talking about?” “We are all tired of it,” he replied. “What do you mean?” I asked. “All the television channels are telling us about people who stole money, how much, how they did it. I am really sick and tired of it. Are there really no happy and positive events in life here?” I said: “Well, that is their programming choice.”

As I see it, things are actually gradually changing for the better, to some extent, the information is becoming more balanced perhaps, although I don’t go online or watch television very often just because I don’t have enough time.

I try to keep an eye on the media environment, and I get the impression that there has been some improvement. But there would certainly be no harm in discussing what you have suggested. I will need to speak with my colleagues.

They can hear you now, and I hope that they will respond.

The Chicago Tribune’s correspondent over there, you have the floor, please.

Rachel Marsden: President Putin, Rachel Marsden with the Tribune Publishing out of Chicago, United States.

Yesterday, President Donald Trump announced the withdrawal of the American troops from Syria. He also announced that, in his opinion, the United States defeated ISIS in Syria, he made that very clear.

What is your position with respect to his statements, both on the withdrawal of the American troops from Syria and also with his statement regarding the defeat of ISIS by the United States?

And, secondly, do you have concern that the American troops will remain in some form? There has been much discussion, for example, around the presence, potentially, of contractors in other jurisdictions where the United States is either out of militarily or might want to be out of militarily but in a more discreet way.

Thank you very much.

Vladimir Putin: As concerns the defeat of ISIS, overall I agree with the President of the United States. I already said that we achieved significant progress in the fight against terrorism in that territory and delivered major strikes on ISIS in Syria.

There is a risk of these and similar groups migrating to neighbouring regions and Afghanistan, to other countries, to their home countries, and they are partly returning.

It is a great danger for all of us, including Russia, the United States, Europe, Asian countries, including Central Asia. We know that, we understand the risk fully. Donald is right about that, and I agree with him.

As concerns the withdrawal of American troops, I do not know what that is. The United States have been present in, say, Afghanistan, for how long? Seventeen years, and every year they talk about withdrawing the troops. But they are still there. This is my second point.

Third. So far, we have not seen any evidence of their withdrawal but I suppose it is possible, the more so because we are progressing towards a political settlement. The current issue on the agenda is building a constitutional committee.

By the way, when we met in Istanbul – I mean Russia, Turkey, France and Germany – we agreed to make every possible effort to create this constitutional committee and Russia, for its part, has done everything in its power for this to happen.

As strange as it may seem, we fully agreed on the list of members with President al-Assad, who designated 50 people and was involved in selecting 50 more from civil society. Despite the fact that he is not happy with everything, he agreed with this.

Turkey, which represents the interests of the opposition, also agreed. Iran agreed. We submitted the list to the UN and, as Minister Lavrov reported to me just yesterday, unexpectedly, prompted by our partners – Germany, France and the United States – UN representatives (Mr de Mistura) decided to wait and see.

I do not understand what is going on there but at any rate, I want to believe that this work is in its final stage. Maybe not by the end of this year but in the beginning of the next the list will be agreed and this will open the next stage of the settlement, which will be political settlement.

Is the presence of American troops required there? I do not think it is. However, let us not forget that their presence, the presence of your troops, is illegitimate as it was not approved by a UN Security Council resolution. The military contingent can only be there under a resolution of the UN Security Council or at the invitation of the legitimate Syrian Government. Russian troops were invited by the Syrian Government. The United States did not get either of these so if they decide to withdraw their troops, it is the right decision.

There is another very important component in this process. Despite all the disagreements, our specialists, our military personnel, security services and foreign ministries have established a rather constructive dialogue to address acute issues in combating terrorism in Syria. Overall, we are satisfied with our cooperation.

Remark: (From the audience) You will not forget about Gazprom, will you?

Vladimir Putin: How can I forget about Gazprom? Just a second.

Olga Ivanova: Good afternoon. My name is Olga, I represent the Selskaya Zhisn (Rural Life) newspaper. It marked its 100th anniversary last March. You congratulated our editorial board, and we are very thankful for that.

Here is my question. Judging by the current statistics, the growth rate of the agricultural sector has slowed down despite the absence of competition because of the sanctions and the terrific environment. How can you explain that? And does that bother you?

And another one: there are no national projects for agriculture, why is that?

Vladimir Putin: As for national projects and agriculture, agriculture has long been a national project in Russia. It receives state support worth hundreds of billions of rubles, and it will keep receiving it, both large and small farms, all segments of the sector.

As for the low growth rate. Yes, it is true. Are we worried? No. And the environment is far from being terrific, our agricultural producers work in difficult conditions.

First, there is still competition. Thank God, competition is developing inside the country, and this is very important for the development of this sector of the economy. There is also foreign competition. Not all countries imposed sanctions, which means we did not take counter-measures against them. We introduced such measures against the EU countries, the US and other countries that imposed sanctions against Russia at the instruction of the US. But the majority of countries in the world did not, and there are many of them. They supply us with their products and therefore there is competition.

Speaking of what is going on in agriculture, these are statistics and they relate to grain production. As you know, last year we had a record-breaking grain harvest of 135.5 million tonnes. This is the main factor influencing the statistics. This year, due to unfavourable weather conditions – and in 27 regions a state of emergency was declared – the harvest was smaller: 110.5 million tonnes. Therefore, as compared to last year, there is a decline. However, these 110 million tonnes rank third in terms of production volume in the past 25 years. It is a very good result. Combined with the reserves from last year, potential exports grew to 52.5 million tonnes. We will fulfil all obligations and contracts. So we are not worried at all.

In the agricultural sector, there are areas where we need to act and maintain our efforts. What are these areas? We need to improve our competitiveness, and expand the infrastructure, in order to boost exports, among other things. Incidentally, last year exports totalled 20 billion, and this year they will reach 25 billion. There was a time when these figures were hard to imagine. Russia exports 16 billion worth of arms, while agricultural exports are at 25 billion. We will continue to support agricultural and export infrastructure development; about 400 billion rubles will go toward these ends over the next few years. This includes developing ports, roads and so forth, and supporting exports with financial instruments. This is how we can enhance our competitiveness. Of course, professional training, selection breeding, etc. are also important. You know this better than I do.

Second, we need to promote high value-added production, including meat and meat processing.

For course, we also need to address matters related to the social development of rural areas. This programme will remain in place.

Artyom Artemenko: Good afternoon, Artyom Artemenko, Crimea 24 television network.

Vladimir Putin: Good afternoon.

Artyom Artemenko: Mr President, you recently said that the restrictions Russia is facing from some countries have a direct bearing on the people living in Crimea who voted for reunification with Russia in 2014. Can you explain what you meant? How do we deal with this? Thank you.

Vladimir Putin: I did say this, even though I can hardly recall where I was at the time, but I can explain it. This is an interesting situation. What we hear from the outside is that Russia annexed Crimea. But what does annexation mean? It means a forcible takeover. If this had been an annexation and a takeover by force, the people in Crimea would have had nothing to do with it and would not be to blame. But if they came out and voted, this was not an annexation. So what is going on? After all, sanctions were imposed against them, against you. What are these sanctions? Restriction on mobility, restrictions on border crossings, visas, financial transactions, insurance companies, marine infrastructure use and the use of other facilities. These measures affect almost everyone living there. They were the ones targeted by these sanctions, and this is not just about singling out specific individuals like the government leaders in the Republic of Crimea and Sevastopol, but about targeting everyone. If they had had nothing to do with it, if it had been annexation, why were the people sanctioned? But if you were sanctioned for taking part in a specific vote, then they would have to admit that it actually took place. This is what this is about, and this is what I meant.

Alexander Yunashev: Good afternoon. Alexander Yunashev, Life online publication.

Mr President, there is a state programme for supporting positive content in cinema and television, which is, in fact, funded with our taxes. Are such support measures possible and necessary for the Russian segment of the internet?

And the state channels will not ask: when are you getting married? And to whom? (Laughter.)

Vladimir Putin: These are two completely different questions.

Are you married?

Alexander Yunashev: Yes, I am, and I have no regrets about it. I can recommend it.

Vladimir Putin: He is married, and wants me to be in the same boat. (Laughter.) Well, all right. Let us assume that I answered your second question, although as a gentleman I will probably have to do so at some point. (Laughter.)

Now, with regard to supporting the Russian segment of the internet. Yes, it is the right thing to do, and we are already doing so. We have grants, I am not sure about the exact amounts, but they are measured in hundreds of millions of rubles. These grants are related to content, and we are allocating, I believe, 144 billion rubles to this end. Overall, we officially allocate about 400 million rubles for this type of activity, so we are doing this and will continue to do so.

Let us continue with the Eurasian Women’s Community. It is an important follow-up to the question of marriage. Please go ahead.

Marina Volynkina: Eurasian Women’s Community, Marina Volynkina.

Mr President, first of all, I would like to thank you for attending the Second Eurasian Women’s Forum. It was important for the women of the world.

Vladimir Putin: Thank you.

Marina Volynkina: There was a panel dedicated to the media at that forum. After we conducted this panel, 15 memorandums on peace were signed by the participants about responsible media which joined our campaign and which support the idea that information in the world should be positive.

In this regard, I have a question for you: how important is it for you, as President, that all the journalists present here not just tell the truth, but also do their job objectively and responsibly, so that they act as a serious soft power, and not just as a medium to resolve certain business problems.

Today, for us, women, it is very important, amid aggression and tensions – and we are really afraid of war – for the soft power to work. Is there soft power in Russia and what is the role of responsible journalism?

Vladimir Putin: You know, the truth is not in power …

Marina Volynkina: The power is in the truth.

Vladimir Putin: The power is in the truth, that’s right. This formula includes what the media are all about. The power is in the truth, and this is the only way that the media can win the trust of millions of people.

Unfortunately, let us face it – our life is very much commercialised just as in the past in the Soviet era everything was politicised, which undermines media credibility with many people.

People are dividing everything they see or read by 100 or 1,000. Still, we must strive for this. Clearly, we must strive to be as objective as possible in matters that are vital for our country and the rest of the world.

This is important not just for me, but for all of us. I hope that this trend is still there, and I think it will continue.

Let us have the question about Afghanistan, as I promised.

Question: On December 6, Russia refused to support a UN General Assembly resolution on Afghanistan because of its disagreement with the position of some Western countries.

Vladimir Putin: Because of what?

Remark: Because of its disagreement with the position of some Western countries.

Vladimir Putin: What was that resolution about? Can you remind me, please?

Remark: Western countries.

They said the situation in Afghanistan was good, while Russia believed that…

Vladimir Putin: We believe that it is not good. What do you think about this?

Remark: I would like to know what you think.

Vladimir Putin: Do you want my opinion?

Question: At the same time, the US is conducting separate talks with the Taliban. In light of this, what will be the future of the Moscow format of consultations on Afghanistan, which were attended by delegates from 11 countries?

Vladimir Putin: The Moscow format?

Remark: Yes.

Vladimir Putin: To be honest, I do not recall the details of that draft resolution. But I think you will agree with me, and I am sure that the majority of those who live in Afghanistan will agree with me.

I do not know what our Western partners wanted to achieve with that resolution. If they wanted to declare that everything is fine there, this has little to do with reality.

What part of the country does the Kabul government control officially? Not more than one third, to be perfectly frank; do you agree? When elections are held, it takes months to add up the results. Is this how it should be? So what is there to approve of?

Talks are underway with the Taliban. This is probably unavoidable. But we must understand the subject of these talks and their possible outcome. If there is a force that controls the bulk of Afghanistan’s territory, its opinion must be taken into account, but this should be done openly and publicly, so it is clear what we are talking about.

I believe that this is probably the essence of our Foreign Ministry’s position at the talks. We are not against a settlement. Overall, we believe that the problem can be settled exclusively through an agreement between all parties to the political process in Afghanistan.

Until then, we will need to reinforce our military base in Tajikistan. We believe that the people of Afghanistan will eventually reach an agreement, and that all political forces and ethnic groups will reach a consensus.

We will facilitate this process as much as we can, including by promoting economic cooperation with Afghanistan and by taking part in various international projects, such as the Trans-Afghanistan Pipeline [gas trunk line], TAPI.

Dmitry Peskov: Mr President, let’s give the floor to Andrei Kolesnikov.

Vladimir Putin: You have not been called on for four years in a row. How can this be? Go ahead. It is [Dmitry] Peskov’s fault. We will punish him.

(Addressing Andrei Kolesnikov.) Andrei, please, let the young lady speak first. She has not been called on for four years in a row.

Remark: It is seven years for us.

Anna Vavilova-Dollezhal: Thank you very much for sparing me having to wait another year.

After the law on foreign agents was passed, there was an enormous uproar over human rights being violated and so on.

Vladimir Putin: One of my colleagues – I will not give his name – was asked during talks: “What is the situation with human rights in your country?” [Allusion to a Soviet-era joke.] He looked at his interlocutor and asked: “Who is the human being you are talking about?” I would like to ask you: who is the human being you are referring to?

Anna Vavilova-Dollezhal: In our country this primarily applies to legal entities, while Maria Butina was arrested in the United States as a private individual. This law [on foreign agents] has been in effect in the US since 1938. I would like to ask you if it makes sense to borrow from the experience of our Western partners here.

I have another question that is very important to us. I represent Tsargrad TV channel and we want to know what you think about the situation developing around Orthodoxy globally, given recent sectarian activities by the Patriarchate of Constantinople and Kiev. Perhaps, everyone is now beginning to realise that the United States is the main player here. So it turns out that religion is heavily dominated by geopolitics. Is that the case?

Vladimir Putin: Regarding the first part of your question, we have relied on international experience when we passed the law on foreign agents. This is not about bans. This law requires that any entity receiving funding from abroad to carry out its public political activities must be registered as a foreign agent. That is it. Incidentally, this type of activity is banned in the United States and here you have the result: under this law Butina was arrested and taken into custody and might be sentenced to 12 years in prison. We do nothing of the sort here. Our law only requires registration for entities receiving funding from abroad. There is nothing here to fear. Frankly speaking, I do not see any problems here, as far as law enforcement is concerned. However, we, of course, need to look into the matter.

When I meet with human rights activists, they point out certain drawbacks in this law, aspects actually related to charity rather than politics. And I think they are right. We need to pay close attention to what is happening in life and make adjustments where necessary. This must not interfere with our normal life and must not hinder the activity of honest and decent people who want to solve problems, including with the support of like-minded people abroad. There is nothing wrong with this. But political activity must, of course, be prohibited. Well, not prohibited but at least subject to law.

Second, the Orthodox church. The situation with the Orthodox church defies comprehension. This is direct interference of the state in religious life. This has not happened since the Soviet Union. But, unfortunately, it is happening in Ukraine now. They created this breakaway church of the Istanbul curacy. They did not like the Moscow curacy so let it be the Istanbul curacy.

Note that the Ukrainian Orthodox Church of the Moscow Patriarchy was completely independent. Perhaps few people know this but it was actually a completely independent church. They did everything independently, including the election of bishops. The only connection was spiritual as they mentioned the name of Patriarch of Moscow and All Russia during sermons. That was all. Now look at how dependent they are becoming on Turkey, on the Turkish Patriarchy. Many appointments and, most importantly, a lot of money. I think this is Bartholomew’s main impelling motive, to bring this territory into subjection and make money on it. I believe this is the main underlying motive – except for a tip from Washington, of course. The fact that the State Secretary called Kiev about this matter and discussed it is an outrage. Absolutely unacceptable. However, it is happening.

Of course, this is another indication of the fact that the measure is also related to the election campaign and is meant to further widen the gap between Russian and Ukrainian people. The rationale behind it is, without doubt, political, and it is not good news for religious freedom in general. This is a clear and flagrant violation of the freedom of religion. I am mostly concerned about the likelihood that property redistribution will follow. This is already happening. This redistribution could turn into a heavy dispute, if not bloodshed, God forbid. I am sorry for the people who are defending their interests. They are usually helpless and unarmed. They are usually seniors and women. But there is, of course, the risk of property redistribution.

Dmitry Peskov: You promised a word to Kolesnikov, Mr President. We have been on for two hours now.

Andrei Kolesnikov: Good afternoon. Andrei Kolesnikov, Kommersant newspaper.

Mr President, the French protests against the fuel hike have, as everyone knows, morphed into a general protest against everything. President Macron has had to impose emergency social and economic measures. What is your take on the events in France? Are there any plans to raise fuel prices in Russia? There has been much talk about it recently. How likely do you believe it is that Russians would take to the streets, and what should the Government prioritise in that case? Its responsibility to protect the rights of the protesters or the need to uphold the rule of law?

Thank you.

Vladimir Putin: One does not exclude the other. Let’s begin with the final part of your question. We certainly must ensure our citizens’ freedom of expression, their right to voice their opinions including by holding public events. But such events, including public gatherings, must always remain legal. Activities that violate the law are unacceptable, and warrant the government’s response.

Let’s now turn to the events in France and to how they are seen from our shores. I believe that of course they have to do with the rise in fuel prices. But the hike was a trigger that sparked the unrest involving a large part of French society, and generally native French people. Recent data suggest that a significant proportion of the French, over 7 percent, support this. However, I do not believe it would be right to judge the French authorities’ response to this.

What is the difference between what we see in Russia and the situation in France with regard to fuel prices and the rest? The French Government was deliberate in its decision to increase the price of petrochemicals and fuel, which means that the Government did it. It was a policy move. This initiative was intended to redistribute resources, in this case, the resources of the population, and to use them to address other matters related to the energy policy. The funds that the Government expected to raise from gasoline, diesel fuel and motor oil sales were to go towards developing alternative energy sources such as solar energy, wind power, and so on. This was a deliberate move. The people did not like it, because they did not want to be the ones to pay for these changes.

What is happening in Russia? Gasoline prices have been growing since mid-2018 as the price of oil went up on the global markets. However, the Russian Government was prompt to take action in order to contain and even lower prices, and an agreement to this effect was reached with the main oil companies and refineries. That is the difference: over there the price hike was a conscious move, they were the ones who did it, while the Russian Government is fighting to ensure that prices do not go up.

Of course, no one likes it when prices go up, but the fact that the Government is acting this way is obvious. Whether it is for the better or for worse is another question, but this is what is going on. An agreement has been reached, and it covers a period until March 2019. Yes, an adjustment is possible when VAT goes up in early January, but I do not expect it to be substantial. This should be an adjustment in the order of 1–1.5 percent, not more, after which the Government will carefully monitor developments on the Russian and international markets.

I can share more details on this subject later on, but generally speaking this worked, even if we had to micromanage the situation, and I hope that it will also work in the future, so that the Government will be able to prevent any sharp surges in fuel prices next year.

Remark: (From the audience)

Vladimir Putin: What did you say? I cannot hear you.

Dmitry Peskov: This is about the potential for protest in Russia.

Vladimir Putin: I have already answered this question. I said that people have the right to express their point of view and to defend it, including in public, at rallies, but only within the limits of the law.

Alexandra Tinyayeva: Alexandra Tinyayeva, Ryazansky Krai TV company.

Mr President, digital television is fast approaching, and our region will be one of the first to get it. Analog television will be turned off as soon as February 11.

In this regard, the question is how do you assess the level of preparedness of all the regions for the transition to digital television? Will small towns and villages not be left out?

How to ensure the interests of those for whom buying even the cheapest console or any kind of equipment, for that matter, is a major expense? Of course, digital television of excellent quality and 20 free channels are a good thing. But what about regional media?

I think many colleagues will support me, because for us it means we should pack up and grab the want ads, as we will not be able to survive in analog television, and they will not let us into the multiplex.

Vladimir Putin: I am fully with you. My colleagues are aware of it. I am not pretending, or making up anything. When I discussed this matter with them, and when they insisted on moving ahead with digital, I agreed with them, just as I agree with you now – it improves the quality and the quantity of free channels.

Trust me, just like you, almost word for word, I asked them this question: “Is it possible that someone in a small village will be left without television?” That is the question. They say no. So, we agreed that we would proceed very carefully, in small steps.

Currently, Tver is undergoing such an experiment, then you. So far, there have been no complaints in Tver. The governor reported to me that he had gone to almost every village and is on top of things. They will help everyone in need of support in order to help them switch to digital, including the small devices needed to receive television of such quality. Then, another couple of regions, on and on …

Truth be told, there was a proposal to move fast and be done in six months. I said, “No, we cannot do that. We must act very carefully and monitor things on the ground and, of course, ensure the interests of the people who cannot afford these consoles, even though they are not expensive.” We will see how it goes in individual regions and then take small steps along this path.

Sergei Brilyov: Good afternoon, Mr President.

For understandable reasons, when international politics are discussed at this news conference, it is commonly about conflict, with the possible exception of China.

Today, on December 20, I wanted to mention a project I am working on with my British colleagues. This unprecedented project is on the history of cooperation between Soviet and British secret services during the Great Patriotic War, and the story of 36 Soviet agents that were sent to Nazi-occupied Europe. If you allow me, I will send the materials to you through Mr Peskov.

In this connection, I cannot help but ask you about the current status of Russian-British relations. Let us start with the small things. After the G20 summit, Dmitry Peskov told us that he did not know whether you had met with Theresa May, but you did meet with her. What do you think of these relations? And another interesting question: How, in your opinion, will Brexit impact Russia? What if it does affect us?

Vladimir Putin: Regarding these meetings, there are many meetings at events like the G20; you cannot even list them all because everyone is busy, and we meet, as they say, on the sidelines.

What does “on the sidelines” mean? We get up, we are walking near each other, you greet someone and say something to them. The Prime Minister of the United Kingdom and I greeted each other in about the same way and said a few words to each other. In my opinion, Russian-British relations are at an impasse, and it is in the interests of both states to move beyond this impasse.

How will Brexit impact us? The impact will be minimal, but it will affect the entire European economy and the global economy, as well. Therefore, it will affect us indirectly.

Are we interested in restoring full relations with the United Kingdom or not? Yes, we are interested; besides, in my opinion, the United Kingdom, primarily its business community, is also interested in this.

We know the British work in our country – fairly actively, I can tell you. Flagships of the British economy like British Petroleum, one of the key shareholders in our leading oil and gas company, Rosneft, – they are working here, and continue to do so, actively operating in our market, and they want to continue, and not just them.

Now, in connection with Brexit – if this eventually goes through to the end, and, by the way, I understand the position of the Prime Minister, she is fighting for Brexit (let them decide this for themselves, this is none of our business, or else they might accuse us of wrongdoing again), but the referendum did take place. So what can she do?

She must implement the will of the people as expressed in the referendum, or that is no referendum at all. Some didn’t like it – and the whole thing goes around and around. Is this democracy? I wonder how the critics of this process will assess the situation if and when some spit on this Brexit deal and carry out all these events again until they satisfy someone.

So what is the point of holding a referendum and what is the meaning of direct democracy? Well, anyway, this is their concern, never mind. But, they are interested in our market, interested in direct partnerships. We did not discuss this with the prime minister, but we discussed it with our colleagues and friends; we have many in Britain, especially among the businesspeople.

You know, if you look at direct foreign investment, where has most of the direct foreign investment come from this year? From Britain – $22 billion. Germany is second, followed by Singapore. That says something, right?

True, this may be partly due to the repatriation of our capital, because they have somewhat scared it off over there, but all the same, there is huge interest in our agriculture (our export potential is enormous and keeps growing), industrial production and the energy sector. There are so many areas. And I hope that common sense will prevail.

What about the skis over there? I find it interesting; it’s winter now.

Svetlana Shaganova: Svetlana Shaganova, State Television and Radio Broadcasting Company, Karachayevo-Circassia. I have one simple problem for you: Putin plus skiing equals our region – Karachayevo-Circassia. You are certainly faithful to judo and sambo, but we would be happy if you visited our region, our new Arkhyz resort and enjoy the skiing there. Will you find such an opportunity in your busy schedule?

Vladimir Putin: I would very much like to do this. Either way, I congratulate you on the development of tourism. The republic is developing, these are competitive advantages for the republic – developing resorts like this. I’m sure this will develop further. If I can, I will come with pleasure. Thank you very much.

Remark: Regarding Gazprom, Mr President.

Vladimir Putin: Ah yes, Gazprom. Yes, one more question now, please, and then about Gazprom.

Goar Botoyan: Thank you.

AZG Daily, Armenia, Goar Botoyan. Thank you for letting me ask you a question for the fourth time already.

Vladimir Putin: I am listening.

Goar Botoyan: My question is, how will Russia restore its policy towards Armenia after the elections?

Vladimir Putin: What do you mean, restore? We have nothing that collapsed to the point of needing to be restored. Russia and Armenia have smooth relations, this country is our strategic partner in the region and the world in general; it is a member of the Collective Security Treaty Organisation and the Eurasian Economic Union. What is there to restore? We only need to build on the foundation that has been created by the previous generations of leaders. The Armenian people are the closest ally of the Russian people in Transcaucasia; that is the way it has been historically, the way it is today and the way it, hopefully, always will be. We need to proceed from the realities of the current situation in the world and the region, proceed from the needs and our capabilities. We will discuss this soon with Mr Pashinyan, who is to pay us a visit next week.

Goar Botoyan: Thank you very much.

Vladimir Putin: What about Gazprom, what’s up? Why are you scaring us?

Viktor Smirnov: Viktor Smirnov, 47news.ru, Leningrad Region. I will explain why Gazprom has no more gas.

Vladimir Putin: Do, please.

Viktor Smirnov: A bit of an introduction first. As you know, the Nord Stream pipeline passes through Leningrad Region; Nord Stream 2 is underway as well. You are now launching the TurkStream project, it all sounds good. But many Leningrad Region residents, who see these pipelines pass through their territory, have not had any gas for many years. Just recently, on December 7, Gazprom went ahead and said that it had no gas for the new consumers residing on the territory of the entire Karelian Isthmus.

Vladimir Putin: The Karelian Isthmus, you say?

Viktor Smirnov: The Karelian Isthmus, yes, two Leningrad Region districts and a section of St Petersburg’s territory. They believe the reconstruction of some compressor station for supplying people with gas is unnecessary (either they do not have money to spare or have already allocated it someplace else).

Similarly (this is just for the record, though), a couple of years ago, a pipe was stolen there – simply stolen. It cost a total of 1.8 billion rubles. No criminal proceedings have been initiated since.

Vladimir Putin: I do not understand. Did someone dig it out and drag it away, or what?

Viktor Smirnov: No, it was not installed, but the paperwork was all in place. So it kind of exists, but kind of does not.

Vladimir Putin: You mean, the money was allocated, but no pipe was laid?

Viktor Smirnov: Right. No criminal proceedings were initiated either.

Vladimir Putin: Where did this take place?

Viktor Smirnov: Priozersky District. You have been there before, you have seen it.

Vladimir Putin: I have indeed.

Viktor Smirnov: On top of this, the deadlines for connecting the Leningrad Region users to gas grids are often missed, but in the gas monopoly they use the beautiful words “postponement and synchronisation,” annual. That is, the deadlines are missed, and missed, and missed again, but this is synchronisation.

And the fourth point I would like to mention. With all the problems in the gas monopoly and the problems of the residents who also suffer from these problems (some have had no access to gas since 2009), despite all this, the children of the board members, the specific individuals we wrote about, have no qualms about taking top management positions in subsidiaries. And they have no qualms about posting photos of luxury cars on the internet, and flying in business jets to watch football in Italy. How is that for national wealth, Mr President? Aren’t they going too far?

Vladimir Putin: Well, it always helps to keep track of expenses, on superjet flights, to look what they actually did there, and what kind of football they watched. After all, Gazprom, among other things, sponsors foreign football clubs, like FC Schalke 04 in Germany. But why does it sponsor them? Because it does a lot of work there, in Germany, and in Italy too. These contacts need to be maintained. As long as it is within in the bounds of common sense, all is well, and we must always watch this very carefully. So you are right to pay attention to this. I will also look what they fly on and where.

As for domestic gas supply, it is growing. True, our sales on the foreign market are growing also. This year, exports will top 200 billion cubic metres – this is a very good result, a historic high. This is what Russia needs, not Gazprom, it is what our national economy and the federal budget need, because the bulk of Gazprom’s revenues, which then flow into the budget, come from exports, as it should be.

As for internal issues and decisions on connection, I repeat once again, things are moving forward. It is not only about Gazprom, Gazprom lays the pipelines to populated areas, and then there is further distribution, and the so-called last mile, so this problem should be resolved with the help of the region.

Viktor Smirnov: Well, the region has built it.

Vladimir Putin: Built it?

Viktor Smirnov: Yes.

Vladimir Putin: Well, I will check it out. I do not know, I will check and see.

Of course, Gazprom is driven by considerations of economic feasibility, but in addition to economic feasibility, there are social issues, of course, including the provision of gas to households in a given area.

I will see how it is built. You know, in any case, very often there is a discrepancy between the statements of local authorities and the reality. I will definitely pay attention to this. Priozersky District is what I heard. Priozersky, right?

Viktor Smirnov: Part of Priozersky, part of Vyborg, and part of St Petersburg.

Vladimir Putin: Ok.

Viktor Smirnov: Gazprom says that their station is not ready.

Vladimir Putin: I assure you, I will definitely look into this and respond.

Everything is not smooth sailing with us, but things are more or less stable. Here is Novaya Gazeta, I am sure they will come up with something. Please go ahead.

Ilya Azar: Good afternoon.

Vladimir Putin: Good afternoon.

Ilya Azar: My colleagues and friends Alexander Rastorguyev, Orkhan Dzhemal and Kirill Radchenko died in the Central African Republic this year.

Vladimir Putin: This is a major tragedy, I agree.

Ilya Azar: What do you know about the circumstances of their death and, in particular, the possible involvement of private military company Wagner in this?

Secondly, do you think it is right that a businessman whom everyone calls your chef, Yevgeny Prigozhin, is believed to be involved in managing PMC Wagner?

In general, what do you think about private military companies? One gets the impression that you are somewhat embarrassed by or deny their existence. Perhaps, we should be proud of them, because they operate in Syria, Donbass, Central Africa and other countries.

And another short question. As you are aware, human rights activist Lev Ponomaryov, a 77-year-old man, was arrested and jailed for 15 days for a post on Facebook. What do you as a human being think about this? Is that a normal thing to do?

Vladimir Putin: Let us start with Wagner and chefs.

All my chefs are employed by the Federal Guard Service. They are servicemen holding different ranks. I have no other chefs.

This matter should be made clear once and for all so that we do not have to return to it in the future. If someone wants to label someone, they are free to do so, and there is nothing wrong with that. This is part of politicking in our country. There is even such a thing as “safe food.” For your information, we do not outsource this job, and the Federal Guard Service employees do all the work.

Now, on to Wagner and what these people are doing. Everything must remain within the law, everything. We can ban private security firms altogether, but once we do so, I think you will be flooded with petitions demanding to protect this section of the labour market. Almost a million people are employed there. If this Wagner group breaks any laws, the General Prosecutor’s Office will go ahead and give it a legal assessment.

Now, about their presence in foreign countries. To reiterate, if they comply with Russian laws, they have every right to work and promote their business interests anywhere in the world.

Finally, the tragedy that you mentioned. It was certainly a tragedy. These people died and left behind families and friends. In general, unfortunately, a lot of tragedies are connected with journalists. I think we should never forget them, including the journalists who died in southeastern Ukraine under fire, or were killed in gun attacks, practically assassinated. Please do not forget about them, either.

As far as I know, your colleagues travelled to Africa as tourists, not even as journalists, without notifying local authorities. According to the data available to date, some local groups are behind this attack.

As far as I understand, an investigation is underway. Unfortunately, there is no reliable information yet, but we strongly hope that it will be eventually obtained. We are on top of this situation through our diplomatic channels. I hope that at least at some point we will find out what happened there. My heart goes out to you, to all members of the editorial board and the families of the people who died there.

Sergei Milvit: Vladivostok!

Vladimir Putin: Okay, let us hear from Vladivostok. It is louder than the others…

Sergei Milvit: Good afternoon, Mr President. Thank you very much for giving me the floor.

I would like to thank you from the bottom of my heart and on behalf of all residents of Vladivostok for your decision to make it the capital of the Far Eastern Federal District. Thank you very much.

At the last news conference I asked you questions about ecology, a waste incineration plant, Snegovaya Pad and forest clearance. Thank you very much for the closure of the waste incineration plant. I hope it will not be reopened.

The only problem is that there are some companies that would like to handle separated garbage but for some reason the regional operator does not allow it because it is leased and a land plot cannot be subleased and so on.

Recently we had elections and as you know of course, the pension reform was the main reason for protests. This is why the elections were drawn out, this was the main reason.

I would like to continue talking about environmental protection and the sports complex that has not been finished and house equity holders that have been cheated – their residential houses have not been finished. Dalkhimprom-Karyernaya is where our marines are deployed. There is also school #55 that was closed and now children have to go to faraway schools.

And one more thing. The lands of the forest fund are government property like the strategic Primvodokanal facility. What is happening currently? To this day forests have not undergone cadastral registration. They are being cut down and cottages are being built – nothing has changed.

Lakes and water reservoirs at Primvodokanal that should be government property are now privately owned. I would like to ask you to clear up this question.

Remark: Question!

Sergei Milvit: Ok. Excuse me please. We will move on to the next issue. If you could comment briefly on the pension reform.

It seems to me that you were likely deceived about the pension reform. I will explain why. It appears that the pension deficit for 2018 amounts to 257 billion, right?

And when there was some popular unrest, they decided to give them another 500 billion so as to provide some benefits. Don’t you think that it is worth paying attention to this and maybe it is better to cancel the pension reform?

We are spending a lot of money. We have a deficit but are still spending so much. I think generally I have said everything I wanted about the pension reform.

Wait a minute. I would like to say happy New Year to Mr President and wish him strength, every success and all the best.

And, sorry guys, I would like to make one last point. Mr Peskov said that there was some information and I would like to share it.

Instead of all the requests that journalists want me to make, I will speak about the most important issue.

Mr President, please help. Vladislav Shestakov has been sick for three years. He is from the Irkutsk Region, the city of Cheremkhovo. He simply needs to be transferred to Moscow.

People have raised money. Please help us resolve this problem. And please answer the questions that I asked.

Please take measures to return the forest fund to the state and lakes to Primvodokanal.

Vladimir Putin: Let us begin with the most sensitive issue.

I apologise to Novaya Gazeta – you asked me about Lev Ponomaryov. We discussed this issue at a meeting with human rights activists at a Council meeting. It is not because I want to dodge the question, I just skipped over it inadvertently.

With regard to Ponomaryov, the court ruled based on calls for an unauthorised rally. I do not want to question court decisions or the fairness of this particular ruling.

Now, regarding the sensitive issue of the pension reform. In the early and mid-2000s, and you are aware of my position, I said that I was strongly against raising the retirement age, and it was impossible to do so back then.

I still believe this was the correct position, because life expectancy was at a low of 65, and the number of workers (the workers/non-workers ratio) was different and more or less acceptable.

Now, things have changed dramatically. The point is not about the current shortages. The fact is that trends are such that the number of workers is declining, while the number of non-working pensioners is on the rise.

You are right, we can leave this issue unaddressed, and I said so in my remarks. We can forget about it for the next five to seven years; however, then the country will have to do it no matter what, but it will have to be done abruptly, without a transition period, or any easing of terms, including for women.

We will then have to act quickly, that is the problem. If I did not see these trends, I would have never allowed this to happen, but these are objective trends that cannot be ignored.

You know, I was well aware of how people would react. No matter what arguments one can come up with, when a particular person’s interests are at stake, no one is delighted with the prospect. I was well aware that criticism would be coming both from the right and the left.

We know what was done by the left. In their time, they dismantled the Soviet Union with their economic policy, and later, in the 1990s, almost destroyed Russia. We would not be living in the Russian Federation now. Instead, we would be left with Moscovia, or something like it. We managed to keep the situation in check. Moreover, the country is getting stronger and better.

This is an unpleasant and, clearly, not a fun thing to do, but it has to be done nonetheless. To reiterate, if I was not convinced that it would have to be done some time down the road, I would have never allowed it to happen.

Now, regarding the specific questions that you asked, including forest reserves, the school and the sports complex. This, as you understand, requires separate consideration, as these are separate issues.

I promise that I will definitely look into them. I hope that Oleg Kozhemyako will do so as well. I am sure he can hear me now. I want him to submit the corresponding information to me and report accordingly.

Regarding the transfer of the administrative centre to Vladivostok, [Presidential Envoy to the Far Eastern Federal District] Trutnev raised this issue a very long time ago. Vladivostok is doing very well and is really the centre of the region and, to a certain extent, a centre of gravity, I mean with regard to neighbouring countries, so I think this is a well-grounded decision.

Sergei Milvit: More about the child…

Vladimir Putin: Where is the boy now?

Sergei Milvit: The town of Cheremkhovo, Irkutsk Region.

Vladimir Putin: What is wrong with him?

Sergei Milvit: He is ill.

Vladimir Putin: All right, we will definitely help him.

Dmitry Peskov: Our colleagues will take your contact information.

Vladimir Putin: Please go ahead.

Anastasia Melnikova: Good afternoon, my name is Anastasia Melnikova, Znak.com.

Mr President, torture at some prisons, pre-trial detention facilities and special penitentiaries has been reported with frightening regularity lately.

I am now talking about the Sverdlovsk, Chelyabinsk, Orenburg and Saratov regions, Khakassia and the Trans-Baikal Territory. Then last summer, thanks to our colleagues at Novaya Gazeta, we learned about atrocious torture at the Yaroslavl prison.

At the same time we hear the story of serial killer Vyacheslav Tsepovyaz, who, while being held at a high-security prison, was allowed the pleasure of eating crab, caviar and the like.

Don’t you think the Federal Penitentiary Service desperately needs reforming – and this needs to be done right now? Since I am clearly not the first to alert you to this problem, can you tell us what is being done and who will be given this responsibility?

When will prisons in Russia stop being a place for recreation for some people and a place where other people are subject to medieval torture? Because this is really too much, I mean the things that are now happening at federal penitentiaries. This is really too much even for our country.

Vladimir Putin: The situation at the prisons must constantly be overseen by the prosecutor’s offices, first of all. Clearly, the incidents that are being reported are absolutely unacceptable.

Any violation of the law, to say nothing of torture, is a crime. Those who violate the law, who commit these crimes must be held responsible. Incidentally, this is what happens when these kinds of stories come to light, in part, thanks to the media.

But it would also be incorrect to say that we need to destroy the whole system. We should improve the system and bring public oversight to a new level – I completely agree with this.

In connection with this, I would like to remind you that we have established commissions that must work on this and which will receive support from the Government and the President. I expect them to play a positive role in resolving the problems that the system definitely has.

Rustam Falyakhov: Gazeta.Ru, I am Rustam Falyakhov, good afternoon.

Mr President, when you opened the press conference, you summed up macroeconomic results and it seems we are living increasingly better. Paris residents might just be very jealous if we believe the statistics.

Vladimir Putin: Native residents of Paris are moving to the suburbs for a number of reasons. This is why a hike in petrol prices caused such discontent, many native Parisians moved to the suburbs and higher petrol prices are very hard on their budgets. But this is a different issue.

Let us speak about housing construction.

Go ahead, please.

Rustam Falyahov: I have a question about the accuracy of statistics, the accuracy of the information used to measure the standard of living in Russia. If we believe the Government reports, incomes are growing, you also gave the number of half a percent.

Incomes are rising whereas prices are falling. When Russians see price tags on goods and services, they understand that government officials are just playing loose with the numbers. I am speaking about the statistics from the Ministry of Labor, the Ministry of Economic Development, the Finance Ministry and others.

Experts are also bewildered as their numbers and their data do not conform to official statistical data, and apparently, desperate experts are already proposing to introduce a somewhat exotic happiness index, which would take into account the voice of the Russians.

My question is very simple – is it time to fine-tune official statistics? Otherwise, the May Executive Order will be fulfilled easily whereas the happiness index will stand at zero.

Vladimir Putin: I understand and partly share your concern, but only partly in the sense that it should be explained to people where the numbers come from and what they mean, and how they should be taken.

Because when pure numbers are presented and it is said that life has become better and happier whereas people see, as you say, real prices in the shops going up, it causes bewilderment and mistrust of the statistics. They are not perfect, by the way. If we can, if we do not get tired of talking for such a long tome, we can revisit the issue.

The statistics are not ideal but the point is not so much their quality, which needs perfecting, the point is also that people should be told that those are average figures.

We are talking about living standards. We are talking about salaries. I said that in the first ten months there was a 7.4 percent increase, and that by the end of the year it will be 6.9 percent. But people will see this and say, “I have had no such increase.”

This is an average. It concerns certain sectors and certain regions. Somewhere there is an increase in a certain sector, for example, for oil workers or steel workers. And in some cases, there is no increase. These are average figures. That’s the point.

Among the most important indicators are the disposable income of the population and retail sales numbers. This more or less conforms with the real state of affairs. And what is this like?

In 2015, we had an over-2-percent drop in the real disposable income of the population, in 2016 – minus 5.8, and in 2017 – 1.2, but also on the minus side. This is the disposable income of the population.

Incidentally, analysts certainly understand what I am talking about. But for the majority of people it’s unclear. Let me explain what it means and how these figures are calculated, it will take 30 seconds.

It is fairly easy to calculate people’s expenses: how and where they spend money and how much. In other words, if people spent money, they had it. Added to this are bank deposits and cash savings. This is, on the whole, a calculable sum, because it is more or less clear how much money people keep in banks. The Central Bank, which regulates the money supply, is aware of the total amount: how much is kept in banks, how much is in the hands of consumers. Cash savings in foreign currencies are harder to calculate. But this is basically clear. Then the taxes paid by an individual (personal income tax, or property tax if there is any property) are deducted, and then the figures are adjusted for inflation.

These are the disposable incomes of the population. Again, they had been falling in our country in these years. And only now, by the end of this year, we may have a 0.1-percent increase, but only if we do not take into account the lump-sum payments of 5,000 rubles to pensioners at the end of 2017.

So, the trend is generally positive, and it is backed up by other data. What data? Sales volumes – sales are picking up. Despite some problems in the auto industry itself, car sales have grown 27 percent.

As I said, the production of clothing and footwear has increased, food production is up 13 percent compared with the previous increase of 9 percent.

The volume of international air transportation has surged 46 percent, while domestic air travel has grown by more than 20 percent. These are all signs of growing consumer purchasing power. It is gradual and cautious, but it has been recovering.

It seems to me that if we explain this to people in normal human language and show it as a whole, it will become clearer where we are and where we are going. But this system undoubtedly needs to be improved, I completely agree with you.

It is difficult for me to decide… The one with the Russian flag – by all means.

Yelena Yeskina: Thank you very much Mr President, first of all from the cameramen because it appears that my flag was in their way. But do not worry, the flag was the longest but my question will be brief. My name is Yelena.

Vladimir Putin: The Russian flag cannot be in anybody’s way.

Yelena Yeskina: You see, camera operators. So, my name is Yelena Yeskina, and I am a journalist of the Dagestan State Television And Radio Broadcasting Company.

We live in a multi-ethnic country and this is wonderful, is it not?

Vladimir Putin: It is very good.

Yelena Yeskina: Here is my brief question. I will just add a little. I am indeed lucky because I live in a multi-ethnic country…

Vladimir Putin: Please say a few words about yourself. Go ahead please.

Yelena Yeskina: …in the multi-ethnic republic of Dagestan and plus in a multi-ethnic family. I am Russian and my husband is Avar, so our children do not really look Slavic.

Vladimir Putin: You yourself look like an Avar.

Yelena Yeskina: Really?

Vladimir Putin: Yes, a bit.

Yelena Yeskina: Must be all the years of living in Dagestan.

Vladimir Putin: Indeed. (Laughter)

Yelena Yeskina: After I had children, I started paying attention to what they show on Russian television. Very often, if not always, they show in ads beautiful children – so fair, with light hair, light eyes, big blue eyes.

And I started wondering where the other types, for instance Mongoloids, were. After all, Russia is multi-ethnic; we have about 200 ethnic groups. Let us take a regiment, the main regiment of the country– the Kremlin regiment and the guys there look Slavic. There is an unspoken requirement that Slavic guys should form this regiment. Do you not think so?

Vladimir Putin: No, I do not.

Yelena Yeskina: You do not. Then it just seemed so to me. Okay, Then I will just ask you…

Vladimir Putin: It just seems like that to you.

Yelena Yeskina: Probably it does, I apologise.

I have a request for you. This has nothing to do with seeming, and it is a big request. Please look into the investigation of the Gasanguseinov brothers’ case.

Two teenagers were shot in Shamil District in 2016. It turned out later that they were not militants and were not involved in illegal armed units.

Now the case has been reclassified and is being investigated under Article 105 Murder where the father is considered the injured party. This case has been transferred to Moscow but has not been brought to a close.

I would like to ask you to personally oversee the investigation of the case of the murder of the Gasanguseinov brothers and please rehabilitate them officially as soon as possible. I just feel so sorry for their parents.

Vladimir Putin: I must give corresponding instructions to Mr Bastrykin [Chairman of the Investigative Committee]. Consider it done. He will take control and report to me on what is happening there.

To be honest, this is the first I have heard of it, but I promise you that I will give it the attention it deserves and Alexander Bastrykin will receive corresponding instructions.

Turkey… Please pass the microphone.

Fuad Safarov: Fuad Safarov, journalist and analyst on Turkey, RiA Vesti (Russia and Azerbaijan Vesti) news website.

Mr President,

Recently, Turkey marked the anniversary [of the death] of the founder of the Turkish Republic Mustafa Kemal Ataturk. I would like to know what you think of Ataturk as a person and his historic role in global policy. Looking back at Ataturk, how will you assess today’s progress in relations between Russia and Turkey?

Vladimir Putin: Ataturk is certainly an outstanding figure in Turkish history. He made an extraordinary contribution to the efforts to preserve and restore Turkey as a state, he did quite a lot to achieve this.

He was a great friend of Russia, we know this, and he cooperated with Russia, worked with it and we appreciate his input very much.

Ataturk created modern Turkey, having laid the foundation for the state. This is what I think of him.

As for the status of our relations today, I think we should be satisfied with the progress in the development of ties between Russia and Turkey in the economy and on security issues. Although our interests have not always coincided on some matters, we have managed to make compromise decisions on how to resolve the Syria crisis.

We respect the national interests of the Turkish Republic and the Turkish people in this area, and we see that our Turkish partners are willing to compromise and so together we make these compromise decisions to secure the development of a favourable situation in Syria and for the sake of fighting terrorism and strengthening our relations.

As for the economy, you can see yourself that our ties are growing stronger. Despite Turkey being a NATO member country, it delivers on its commitments, as far as we can see. At the same time, being a NATO member it is pursuing an independent foreign policy.

We appreciate this, as it creates conditions for maintaining predictable and healthy relations. Of course, in this sense, the role of the incumbent Turkish President is great. Hopefully, this trend will continue under the leadership of Mr Erdogan.

Dmitry Peskov: The CIS TV and radio company MIR, if you please.

Vladimir Putin: The next one will be for equity holders, okay?

Elina Dashkuyeva: Hello, Mr President. Elina Dashkuyeva, MIR.

You said at the Russia Calling! forum that the dollar is leaving Russia. First of all, what advantages and disadvantages can we expect from this? What currency will the Eurasian Economic Union countries now use to pay each other – will they adopt an interstate currency or use new digital technologies such as blockchain?

Vladimir Putin: A very important and interesting question. About dollarisation and weaning the economy off the dollar, including the Russian economy.

In general, according to the IMF, payments in dollars have slightly decreased around the world. The year before last, they were a little over 63 percent I think, and now slightly over 62. But for Russia, this figure is higher, 69 percent.

This is due to the fact that our main export products, primarily oil, are listed on world exchanges in dollars, and this is a large amount.

Our foreign exchange reserves in dollars are declining; only recently, we were holders of American securities quoted in dollars in the amount of $104 billion, now down to $14.4 billion. Payments in yen and pounds have slightly grown in world trade.

As for weaning Russia off the dollar, it will exclusively concern settlements between economic entities, but will in no way affect citizens.

When we were discussing today’s news conference yesterday, Mr Peskov told me that they are removing exchange rate ads in some cities, including Moscow, and people are wondering about the reason behind this, whether this may be connected with some restrictions on using dollars.

There is nothing of the kind, and it will not happen, I would like to reassure everyone. Advertising exchange rates on currency exchange offices is only connected with one thing: the fight against illegal money exchange businesses. This is about streamlining the sphere of finance, money circulation, and cracking down on grey businesses operating in this area, nothing more.

Regarding the ruble. Yes, use of the ruble as a reserve currency in transactions is growing, maybe not a lot, but it is growing, primarily in transactions between the EAEU countries and in the post-Soviet space.

For example, use of the ruble has grown significantly in transactions between Russia and Belarus, reaching, if I’m correct, over 60 percent, almost 70 percent in clearing transactions while the numbers in cash settlements are smaller. But the role of the ruble will certainly increase in this segment, that’s obvious.

It’s more reliable and does not involve extra costs, especially the costs associated with dollar transactions. Because you and I know perfectly well: wherever clearing operations are made, they all go through US banks.

And if there are restrictions, it makes you want to sidestep these restrictions which is a natural reaction. This is happening around the world, by the way, in view of instability with these transactions.

However, several issues must be resolved for the ruble to be used at least as a regional currency. First, cutting volatility. The exchange rate must be stable, and we have generally managed to maintain it recently.

This is related to the activities of the Central Bank and the Government of the Russian Federation. As you have seen, it is stable; it has somewhat lost its dependency on fuel and oil price fluctuations partly due to the introduction of a floating exchange rate for the ruble.

This is the first goal. But we have to ensure further stability and keep inflation low. This is an extremely important condition.

Then comes the next step – we have to develop the financial infrastructure for transactions in the ruble. It is clear what this means. We need to improve the settlement mechanisms between economic parties and financial institutions. We will be working on this.

Dmitry Peskov: Mr Putin, perhaps you will take a question from foreign media. I can see The Wall Street Journalhere.

Ann Maria Simmons: Good afternoon, Mr President. Thank you very much for the opportunity to ask you a question.

In the West, many politicians, experts and even ordinary people see Russia as a great threat. They even think that you, as the President of Russia, want to rule the world.

Vladimir Putin: Well, of course.

Ann Maria Simmons: I want to know if you really want this. Also, please, what is the real goal of your foreign policy? Thank you.

Vladimir Putin: With regard to ruling the world, we know where the headquarters that is trying to do so is located, and it is not in Moscow. However, this is related to the leading role of the United States in the global economy and defence spending: the United States is spending over $700 billion on defence, while we spend only $46 billion.

Just think of it, we have 146 million people in Russia, whereas the NATO countries’ population is 600 million, and you think our goal is to rule the world? This is a cliché imposed on public opinion in Western countries in order to resolve intra-bloc and domestic political issues.

When I say intra-bloc, I mean that in order for NATO to rally countries around itself, it needs an external threat. It does not work otherwise. You have to have someone to rally against. As a major nuclear power, Russia fits the bill perfectly.

With regard to domestic political issues, unfortunately, Russophobia continues to flourish in many countries, especially in Eastern Europe. For what purpose? In order to use old historical fears to ensure their own domestic political well-being.

This is also harmful, because, ultimately, it is about exploiting the phobias of the past, which prevent us from moving forward. It is harmful for the countries and peoples whose leaders are trying to pursue such a policy.

In fact, the main goal of our foreign policy is to provide favourable conditions for the Russian Federation, its economy and social sphere, to ensure unfettered movement forward and to strengthen our country from the inside, above all, so that it can take its rightful place in the international arena as an equal among equals.

We are in favour of consolidating the system of international law, ensuring unconditional compliance with the UN Charter, and using this platform to develop equal relations with all the participants of international affairs.

Dmitry Peskov: Mr President, you promised to talk about housing equity holders. Who wanted to ask about this?

Vladimir Putin: Yes, please. This is an important question.

Alla Andreyeva: Good afternoon, Mr President! Alla Andreyeva, Ryazanskaya Oblastnaya Gazeta newspaper. Mr President, thank you very much for giving me the floor.

Vladimir Putin: You are welcome.

Alla Andreyeva: I am speaking on behalf of St Petersburg.

Vladimir Putin: St Petersburg?

Alla Andreyeva: Like you, I am from St Petersburg.

Vladimir Putin: St Petersburg again. A Ryazan newspaper from St Petersburg. St Petersburg is everywhere.

Alla Andreyeva: We both work in different places than where we were born.

Vladimir Putin: Totally different.

Alla Andreyeva: Mr President, I have a very big request for you: can you please pay more attention to housing equity holders that have been cheated: in St Petersburg, the Leningrad Region and all across Russia.

What is happening now? Unfinished buildings that do not comply with building equity contracts are being commissioned in St Petersburg just to report to Moscow that everything is fine. You see, during your Direct Line on June 15, 2017, Albin and Minenko, a federal inspector, stood in front of my house, which had not been finished; construction was ongoing, but they officially declared the building commissioned, thus committing a criminal offence. But, you see, activists like me are being bullied for taking this position. They are trying to open a criminal case against me, because I am trying to write the truth about the officials.

My husband was killed on October 6, 2015. The investigation has not made any progress. Over the first 18 months they have made my life a nightmare, as well as the lives of my family, because someone leaked information to mass media. My mother passed away when she heard about this from a television report. Can you see what is happening in St Petersburg? My car was burned before that. All of this is happening in our hometown, our St Petersburg. Please, I am begging you to look into this case, to look into housing equity holders not only in St Petersburg, but in the Leningrad Region and everywhere in Russia.

I do not know. Let us, together with you… We are just like you, we do not bite. Come to St Petersburg and meet our activists. We will tell you the truth. We will tell you everything as it is, without these fake reports and road maps, without these useless scraps of paper published by these officials on their websites all over the country. I communicate with equity holders practically from all regions. We have a large group of activists. I have a pressing request. This is not even a question but a cry for help: please help the cheated equity holders and on the investigation of my husband’s case.

Vladimir Putin: Do you think your husband’s murder was related to your activities to protect the interests of equity holders?

Alla Andreyeva: Yes, this is the only connection I can see.

Vladimir Putin: Is that so? I promise you to pay attention to this by all means. Do not have any doubts about this. This is the first thing I will say.

The second is about the problem you raised, it is very urgent indeed. This gives me an opportunity to speak in greater detail about the problem and the construction industry. You know, this will never end if we do not sort out the mess and switch to civilised ways of housing construction. Indeed, the real estate industry is faced with the task of building 120 million square metres of housing but we must stop the practice of attracting people’s money and irresponsibly spending it.

This is what happens: yes, we keep the cost of housing relatively low but at the expense of what? Because some people acquire this housing at relatively low prices. In particular, this is also done at the expense of the people whose money is taken but who do not receive anything – either money or housing. This is the root of the problem and all evil. So we must certainly switch to civilised ways of funding this industry even if this leads to a certain reduction in the construction sector and some increase in prices. But without this we will never be able to put things in order there.

We must switch to bank financing, to normal and civilised loans or else this will never end. The people who found themselves in a difficult situation because they paid the money but received no housing must certainly be helped. We should not shut our eyes to the scale of this problem. It is clear and I agree with you that even the figures that are now shown, the figures on cheated equity holders and their personal problems do not click with reality. In fact, the problem is even more urgent than these documents show.

As for the situation you described in your question, I do not know these buildings of course, but we will see. I will also talk to the Acting Governor of this region, Mr Beglov. He is a very experienced man and can figure this out. I hope the situation will improve. In any case, be sure that this will be a subject of my conversation with him. The first thing that will happen is that he will meet with you.

Colleagues, listen to me. If we want to go on a little longer, we must not turn our press conference into an unauthorised rally. OK? Let us not. So I ask you to calm down.

Dmitry Peskov: Mr President, let me authorise: Marina Kim, The Great Game.

Vladimir Putin: Yes, please.

Marina Kim: Good afternoon, Channel One.

Thank you very much for the opportunity to ask questions. By the way, regarding the question of whether there are non-Slavic faces on Russian TV, well, there are and Channel One shows me live on a daily basis.

Our question is: The Great Game show is about Russia-US relations. We would like to know if a meeting with Mr Trump is possible after he cancelled it himself, for example, in the immediate future. Are you ready for one?

And to quote Kipling, the 19th century, who said the Great Game is finished when everyone is dead. And it was a standoff of the Anglo-Saxon world.

Vladimir Putin: That’s great! “Would you like to meet?” “Will there be a meeting?” “Everyone will die.”

Marina Kim: I will explain. There was a standoff between the Anglo-Saxon world and the Russian world in the 19thcentury. Have the rules changed now or is it the same game? Thank you very much.

Vladimir Putin: Unfortunately, we see that many birthmarks of the past, as Karl Marx used to say, are still there, but I hope that some things will somehow be made right. Ultimately we will reach the bottom in our relations and will understand that we have to go up, to push off from that bottom, go up, take a lungful of fresh air and with a clear head start thinking how to proceed.

I do not know if we have a meeting or not, I said a number of times that we are ready. We believe there are issues that we have to discuss together. Work at the expert level on Syria, for example, is ongoing. We also have to speak about North Korea, and Afghanistan, a great many other situations in the world.

After all, we need to talk about bilateral relations; we are interested in this, as well as our American partners are, by the way. Of course, there is no super-global interest. Our mutual trade stands at a meagre 28 billion, or even lower now, less than 28, 25 to 27 billion maybe. This is nothing, zero. With China, we will reach 100 billion this year, and with the US, everything is in decline. Who is interested in this? No one, not even the President of the United States, who is promoting the idea of reviving the economy, as he says, in his quest to make America great again.

I certainly believe that working with Russia is important in itself, and this includes economic cooperation, at least bearing in mind that we play a key role in the global energy market; cooperation in the field of nonproliferation and global security also matters, among other things. We have a lot to talk about. But we see what is happening there. Now power will change in Congress. Almost certainly, 100 percent sure, there will be new attacks on the current President. Under these conditions, whether he will be able to achieve any kind of direct dialogue with Russia, I do not know; you will have to ask them.

What worries me though? You mentioned the Anglo-Saxon world, where some deep-rooted, tectonic changes are occurring. After all, please note, Trump won – this is an obvious fact no one seems to be arguing with, but they do not want to recognise his victory either. This actually shows disrespect for the voters – refusing to recognise his victory, doing everything to delegitimise the incumbent President.

The same applies to Britain: Brexit got the majority vote – but no one wants to implement it. What are they refusing to recognise? The referendum results. Democratic procedures are being dropped out of the equation, and destroyed; their value is being destroyed. That is what is happening there. This is a serious process. I have pointed out that Western analysts are already discussing this matter, both in the States, by the way, and in Britain. We must keep this in mind. But whatever happens, we still need to build bilateral relations. We are willing to. As soon as possible. As soon as the other side is ready, we will do this.

This one. [Sign] “How’s the health?” Did you mean your health, mine or someone else’s? Or did you mean the country’s healthcare?

Yekaterina Butkevich: Good afternoon.

Vladimir Putin: Good afternoon.

Yekaterina Butkevich: I’m Yekaterina from Ministry of Ideas TV channel. I was asking about your health.

Vladimir Putin: What is the channel’s name?

Yekaterina Butkevich: Ministry of Ideas. It is a private TV channel located in Yekaterinburg. The question is about your health. How are you feeling? How are you?

Vladimir Putin: Don’t hold your breath! (Laughter in the audience.)

Yekaterina Butkevich: I mean everyone is just asking their questions but no one is wondering how you are and whether you need help in some matters. (Laughter in the audience.)

Vladimir Putin: What is your name?

Yekaterina Butkevich: Yekaterina.

Vladimir Putin: Yekaterina, we will discuss it later. (Laughter in the audience.)

Yekaterina Butkevich: Mine is not a question but a proposal.

Vladimir Putin: Go ahead.

Yekaterina Butkevich: We all know that everything is based on ideas. Our life, our future and our country are also based on ideas. And our team proposes to establish a Ministry of Ideas of the Russian Federation.

Vladimir Putin: Establishing the Ministry of Ideas is a good idea.

Yekaterina Butkevich: I would like to hear your opinion on this matter. And we are ready to help establish this agency.

Vladimir Putin: I believe that our Ministry of Economic Development should fulfill this function, because it should generate ideas to promote development. But I am ready to discuss your proposal. We just need to understand the substance, what it means. You and your colleagues please think about it, explain what the “ministry of ideas” is, what it should do, how it will function, on what principles, and what the substance of its work would be.

As for my health, it really does not differ from anyone else’s. I mean, thank God, I do sports, and I am fine. I try to take care of my health. But just like everyone else, I can catch flu or something in the offseason. So far, everything is okay. Thank you very much for your concern.

Yekaterina Butkevich: Thank you.

Dmitry Peskov: Mr President, you have not taken any sports-related questions so far. Will you take one from Sovietsky Sport?

Vladimir Putin: Fine. There is something about a pike. What is up with the pike?

Nikolai Yaremenko: Good afternoon, Nikolai Yaremenko, Sovietsky Sport.

There are many sporting events, but I have only one question. I will not mention the World Cup, which we hosted brilliantly (strangely, no one has mentioned it today), nor will I say anything about Mutko leaving football forever yesterday, or even the upcoming 95th anniversary of our newspaper and our hope to see you as a guest in our editorial offices.

I have a quick question about doping which is a longstanding issue. It appears that this has long since become a political matter. Similar to the sanctions, international sports organisations seem willing to take a bite at us whenever they get the chance.

On the other hand, this is a comfortable position for many of our sports officials as they can sit on their hands and blame everything on politics. Do you think we are now clean enough in this area to be able to say that everything is fine now?

Vladimir Putin: First of all, to a large extent, we ourselves are to blame for this situation, because our athletes did use doping.

It is a different matter that we were accused of authorising the use of doping at the state level. This is not true, and it has never happened and will never happen, because we must keep in mind not only the results, which, of course are important, but also the health of our athletes.

However, since this has happened, we must, first, acknowledge it and, second, admit our fault, which means that we were unable to properly control doping. This is the responsibility of the organisations and government agencies that were supposed to do this.

With regard to whether we have stopped this or not, probably not, not 100 percent. Enormous efforts were made, and a good framework was created to do it properly and to make sure it was done with integrity.

But this is not just our scourge; doping is used around the world. Nevertheless, we must strive to reduce it completely.

The WADA commission is currently working in our country. They are holding talks with the Ministry of Sport, including on access to related materials. But you are right about the political aspect of it, which I hope will be overcome completely as well.

Dmitry Peskov: Mr President, we have been working for quite a while, almost three and a half hours. And so I have a suggestion. There are three veteran journalists from the national level – Terekhov from Interfax, Gamov from Komsomolskaya Pravda and Kondratyev from NTV television channel. I suggest wraping up by taking three questions from them.

Go ahead, Mr Terekhov.

Vladimir Putin: Yes, but let several other colleagues ask their questions too.

Dmitry Peskov: Since you are the most experienced you must express yourself in a few words.

Vyacheslav Terekhov: Absolutely.

In the very beginning you spoke about health, medications, healthcare and the like. In many respects our health depends on medications. Could you please tell us to what extent we are independent of foreign supplies as regards medications? How do our medications compare with their foreign counterparts in efficacy and who is responsible for the fact that our analogues are even worse than planned?

Vladimir Putin: You know, we must put things right here in many respects and counter the assertions you just made. You asked: Who is responsible for the inferior quality of our medications compared to their foreign counterparts? This is not true, they are in no way inferior, however we must combat certain things in several areas.

Doctors that prescribe these medications should cooperate less with producers and think more about their patients. Do you understand? Because when they cooperate with specific producers they say: “Ours are worse – take this imported one.”

But this does not mean that we should get rid of all imported medications. If a certain medication is required, it should be prescribed. This is a sensitive process but it is important to understand what the problem is in all respects.

Now I will say a few words about the scale. First, we have even started to export our medications. This year we will export 700 million worth of medications. This is not so much but still a considerable amount – 700 million.

If we look at price tags, 30 percent of medications are produced at home for the domestic market. They are 60 percent of the range.

As for our dependence or independence, everything is interrelated in this world. That said we produce, say, 80 percent of vital medications. Importantly, there are an increasing number of substances produced in Russia, not simply generics that are brought in from abroad. On the whole, this programme is working. I believe it was launched in 2015 and will be carried out until 2020.

As for the development of the pharmaceutical and medical industry, it is working. About 200 billion rubles are allocated for it and it is fairly effective on the whole. This is a very important area of our work and we will certainly continue it.

Alexander Gamov: Komsomolskaya Pravda website, radio and newspaper.

Mr President, frankly speaking, I feel sorry for President Putin because we have nice numbers, truthful numbers, they are real, they do not raise doubts among experts, I think. Meanwhile, ordinary people do not quite trust them because life is hard in Russia. This is my first point.

The second. There is no peace, I do not mean the situation itself, but in people’s hearts, souls, minds, and thoughts. In other words, people worry a lot about both you and the country. So why does this happen? I believe that the middle tier official, the top tier, ministers, governors – they are all afraid of Putin. You have appointed everyone, lined them up, there are basically all normal people. Whereas those officials who want to talk about an excise tax on sausage, or the Kremlin banning births or whatever, they muddy the waters and make it harder for people to believe Putin, the state and so on. I think some sort of reform is needed. We must do something with this middle tier. Let us retrain them, and let us help you.

To conclude, literally just before the press conference I got a telephone message, a very short one, “Gamov, ask Vladimir Putin if it is time to look into the disastrous gap between the incomes of top managers and ordinary people? When will the President finally make a clear statement about it?” Because you have revisted that topic several times.

Thank you very much.

Vladimir Putin: The point you are making is an eternal Russian argument: The Tsar is good while the courtiers are thieves and outlaws. You see, if something does not go well, it is everyone’s fault. This is my first point. And secondly, as I have already said, the point is not that the numbers are somehow wrong. The point is that they do not work well with the numbers. They do not explain the numbers to the people. Whereas you said that the numbers are good but they are not trusted. As if you failed to hear what I said in the beginning and in the middle, when I gave data related to a decline in the real disposable incomes of the population. What is good about that? I did not say it was good. Incomes fell in the country in 2015 while in 2016 they were down by 5.8 percent. What is good about that? And I did not say it was good, I said the trend is righting itself, thank God, and it is an objective factor. I do not think that people here do not believe it. These are truthful things, and I hope people do understand that.

Speaking about officials in general, you, of course, know that there are people who have no idea what they are saying. They are not where they should be and are not careful with their words. There are people like this. But this is what we all are, our environment. That kind of person was just someone yesterday and is an official now, so they can blab. They are not ready. This means they are simply not ready for the job.

And, of course, we must work with people, with all the officials. There are many good and active people among them, too. This is a fact, we should accept this. You see, it is impossible to close everything and then open the box to make it right. It is not a coincidence that Moses and the Jews wandered in the desert for 40 years. Well, we cannot lead 146 million people across the desert for so long.

This is a process of growing up for the civil service. We are working with it; see, we are organising various contests for young people. We have a human resources contest, Leaders of Russia. We teach them later at our academy. I believe 12 or 15 graduates have already become governors, two are federal ministers and five or six are deputy ministers. Little by little we will be expanding this. It is a long process.

Alexander Gamov: You have not talked about the gap.

Vladimir Putin: Speaking about the gap. First, unfortunately, it does exist.

Second, which is also unfortunate, as rule, this is a global trend. In any case, this is what is happening in large economies. Look what is happening in the US. Our US colleagues are present here, they must read US analyses. The gap between those who earn a lot and those who earn very little is expanding by their estimation. By the way, the campaign of President Trump, the current president, noted this very clearly. They used this in their campaign and turned out to be right.

Of course we must take this into consideration. At the very least we must decrease the number of poor people. This is true.

Is that all?

Dmitry Peskov: Mr President, we have a veteran to wrap things up.

Vladimir Putin: Yes, another veteran.

Vladimir Kondratyev: I will really be brief.

Mr President, speaking at an earlier press conference, you said something interesting, that you collect emotions. You collect emotions, and this is your wealth as the country’s leader. What kind of year was this in terms of emotions? Which event do you consider the biggest?

Vladimir Putin: Two events.

Vladimir Kondratyev: Two events?

Vladimir Putin: Yes. Certainly, the presidential election, as this is important for the whole country. And the World Cup, which also turned out to be important for the whole country and the world.

Ussuriysk, please go ahead.

Yekaterina Kharina: Good afternoon, I am Yekaterina Kharina, Telemix TV Channel, Ussuriysk.

Mr President, last week you signed an executive order on moving the capital of the Far East from Khabarovsk to Vladivostok. I have a question about this: what plans does the Government have to strengthen the regions in the Far East and in particular, of Primorye Territory? Will we live to see the gasification of the entire region? And what do you think about the merging of our territory with Sakhalin Region?

Vladimir Putin: You see, the merging of any constituent entities in the Federation is a matter for the entities of the Federation themselves according to current law. If Sakhalin and Primorye Territory decide to unite, they can; they have to go through their respective procedures in parliament or hold a referendum, whichever is provided for in the regional legislation. But looking deeper, Sakhalin is a self-sustaining region, it provides a large share of its own budget, and the average income of the population is higher than in the Territory in general, but this is the internal business of the two regions. That is my first point.

The second concerns development. We have a complete programme, a package of measures to develop the Far East and Primorye Territory, a complete programme to establish favourable development conditions in the Far East. This includes the well-known Priority Development Areas, which is the ‘Far Eastern hectare’, the development of infrastructure, ports, airports, it is support for exports, including, and primarily, non-energy exports. We will do all this; it will never disappear. On the contrary, all of this will be actively pursued. There must be no doubt about it whatsoever. This will offer us an additional competitive edge.

We will definitely develop science and education; we will keep supporting the Far Eastern Federal University. We will certainly develop the shipbuilding sector and continue the construction of the shipyard in Vladivostok. And you know, the first steps have already been taken for this, and fairly big steps. Russia’s largest tonnage ships will be built in Vladivostok. We will build ships that are bigger than anything seen in the Soviet Union.

We will obviously continue our support for the aviation sector; plants will have contracts to keep busy, and research will be developed. And a totally new sector has emerged – aerospace, the new Vostochny Space Launch Centre. Marine biology, everything connected with fisheries – this will all be a priority for us. I have no doubt that we will achieve positive results.

I promised Euronews. Go ahead, please.

Galina Polonskaya: Hello, Mr President. Galina Polonskaya, Euronews TV channel. Thank you for the opportunity to ask you a question. I will put down the sign, I have already become one with it during these four hours.

The UN adopted a resolution about Russia’s militarisation of the Sea of ​​Azov, Crimea, and part of the Black Sea. After what happened with the Ukrainian ships in the Kerch Strait, there were reports that Russia was sending military equipment to Crimea. Why should Russia reinforce its military presence in Crimea? Is Russia ready to declare the entire water area of ​​the Sea of ​​Azov its territory? Thank you.

Vladimir Putin: Look, in 2014, people living in Crimea came out for the referendum and ultimately voted for reunification with the Russian Federation. From that moment, after the relevant domestic procedures, Crimea became part of the Russian Federation, part of Russia. Therefore, we are entitled to and will continue to pursue our military policy on any part of our territory, as we see fit to ensure national security. Crimea is no exception. If the General Staff, if the border guards believe that we need to do something extra in some area, we will do it. Russia’s security in this area will certainly be ensured. We are not going to overdo it there, but what needs to be done, will be done. This is the first point.

Now about the Sea of Azov and the Kerch Strait. We almost immediately announced that we intended to build a bridge to link up with Crimea, which we did. First we built an energy bridge, then a gas pipe, and now we are building two power plants there, in Sevastopol and in Simferopol, with a total capacity of 940 megawatts. We are building the Tavrida road, to be completed by the end of 2020. Next year, I think, the two-lane road will open, and by the end of 2020, a four-lane road.

We will develop the local infrastructure. That is, it is not only about reinforcing the military component, but above all, the civilian, infrastructure component. All this will certainly be implemented. We have a federal targeted programme for the development of Crimea. For the next two years, we have allocated 300 billion rubles for the development of the peninsula. All this will progress. Along with that, the military component will be strengthened, as far as we need it.

As for the Kerch straits, the situation is difficult, in terms of nature. These straits are very narrow and rather shallow. Their depth is about 13 metres. Let me emphasise that pilotage has always been conducted there. The construction of the bridge does not interfere with anything. Pilots escort ships as they used to.

Freight turnover is growing, in particular, in the ports of the Sea of Azov, this is true. But work there is organised and all participants in these economic activities know how this is being done. There is a queue there. Sometimes it is bigger and sometimes it is smaller. Just look at the number of vessels in front of the entrance to the port of Novorossiysk. There are quite a few of them.

I will have to repeat this once again: On September 11 of the past year Ukrainian vessels, including warships, fulfilled all requirements of passage through these straits and under the bridge and were calmly led by our pilots into the Sea of Azov and further on to their destination in the Sea. Nobody interfered with them – just helped.

This time everything was different. This is a deliberate provocation in the course of Mr Poroshenko’s election campaign. We have already shown in the media the logbook that contains the order to “enter secretly.” What does “secretly” mean? Nobody can say what might happen there without pilotage, all the more so when some politicians say in public that they are ready to blow up the bridge. Naturally, we cannot allow this to happen. This would be simply absurd for us, period. As for routine activities, nobody restricts them.

Now a few words about the regime in the Sea of Azov. We have a treaty dating back to 2003, I think. What does it say? It reads that there is a coastal area of five kilometres, not the usual 12 sea miles in accordance with the international Law of the Sea, but five kilometres off the coast. These are the territorial waters of a state, in this case of Russia or Ukraine, and the rest is common sea. Incidentally, our fishermen were once captured although they did not enter the five km zone. Nonetheless, they were seized and their captain is still detained. And your Euronews channel does not even mention this as if this is how it should be. The same is true of other Russian seamen: there is a dry-cargo vessel with its crew out there somewhere, but nobody recalls anything. Therefore, we should observe these agreements and abstain from announcing any unilateral actions.

As for warships, they should be in constant contact with our border guards. The border guards conduct their border mission. In conditions of martial law, I can hardly imagine warships going to and fro, but in general we would like to normalise the situation. We do not create any obstacles to vessels, including warships. Let me repeat that last September vessels were led by our pilot and nobody interfered with them, on the contrary we only helped.

This is a complicated problem, which we will certainly keep working on. You are right about this, I agree.

As far as the amendments to the Constitution are concerned, this is a matter for broad public discussion.

Dmitry Peskov: Mr President, there is a banner “Russians in Danger.” Please, tell us, which Russians are in danger? The last row. Show it, you raised it before.

Khamzat Batukayev: I am Khamzat Batukayev, Grozny TV Channel, Chechen Republic.

First, thank you for noticing the back row. The press conference has been going on for over three hours, and only the front rows and middle rows…

I have a personal request. We have guests from Latin America here. During each break they keep yelling “Latin America,” but no one is paying attention. If possible, will you please give them the floor after me; they have come a long way.

And now, properly, Mr President, just a second. I have already forgotten what I was going to say.

Vladimir Putin: Let’s talk to the people from Latin America then.

Khamzat Batukayev: This is a serious subject, in fact. I wrote “Russians in Danger” because thousands of our compatriots are still in Syria. They are there for one reason or another, but there are also children who are not there by choice.

Their parents have been sentenced to long prison terms, maybe even life terms. The children are left without parents, without care, and there are many such cases. How can we bring them back? We know your principled position on the issue, so the question is how can we proceed with this?

And, if I may, a second brief question. One of the first requests from the first president of the Chechen Republic, Akhmad-Haji Kadyrov, that was addressed to you regarded the construction of the airport in Grozny, the restoration, to be exact.

It was restored, but ever since it has been suspended in some technical phase, which means it was not completely finished. Currently the republic’s government is holding discussions with various ministries on the second stage and apparently, there are some problems.

How can this be completed? Objectively, Chechnya is still developing, but we host hundreds of thousands of tourists, and the airport capacity is not sufficient.

And the last thing. You know Mr President, we have a main avenue that is named in your honour. You might not be aware that we are currently building the Vladimir Putin Judo Palace.

You always receive one of the highest percentage of votes in the region, I can honestly tell you that Chechens have deep respect for you, this is why I would like to invite you there.

You have also received an invitation from Adygeya or Karachayevo-Circassia, so when you go there, you can also come to the Chechen Republic as a second leg of your trip.

Vladimir Putin: I cannot go to Chechnya on my way to or from. I must go there directly. And I certainly will. This is the first thing.

Second, regarding the children. I believe this is a priority. We are engaged in this; we have a programme for repatriating these children to their homeland, to Russia, Chechnya, to the Caucasus, wherever. And Ramzan Kadyrov is also involved in this. We are doing this and will continue with it.

Urals, there is a sign that says Urals.

Roman Zykov: Good afternoon.

My name is Zykov Roman, Urals television.

Mr President, you say that patriotism should be our national idea. Isn’t it time we codify this in law, amend the Constitution to stipulate that patriotism is the national idea? Right now, a national idea is prohibited by of the Constitution. This is my first question.

Vladimir Putin: It is ideology as a leading force that is prohibited, not patriotism. I hear you. This is a subject for a wide public discussion.

Roman Zykov: And the second question. We have spoken about active patriotism; now, I am worried about the environment.

A lot of money is being allocated for the purification of water, which then goes to consumers, but there is practically no money allocated to maintain the quality of the pipes that deliver it to consumers, and to ensure that the sewage does not pollute our nature.

Unfortunately, 30 percent of sewage water pollutes nature – experts confirm this. Could you look into the issue and possibly adopt some technical regulations so that the quality of the pipes that deliver water to consumers like you and me is higher and we do not pollute the surrounding waters?

Vladimir Putin: This is a question of technical regulations.

You are certainly right. We must look into what is being supplied. I agree with you. It is a problem. But the problem is not only the pipes.

The problem is in the discharge of wastewater, and its purification. This is an issue that affects the entire country. But the relevant decisions have actually been taken here. This also applies to industry.

Applicable law provides for a transition to the latest available technologies. Penalties are imposed for the discharge of untreated water, and, generally, for waste, on companies that do not comply with the environmental requirements.

As for the airport, when needed, it operates as an international airport. If something more is needed, Mr Kadyrov will come and tell me. I will see what needs to be done; I just do not see what else needs to be done. The airport is functioning, but if we need to do more, we will see. Will that do? And thank you for the invitation.

Friendship of Peoples – over there, a young woman is standing in a kokoshnik. Yes, please, give her the microphone.

Valeria Pavlyuchenko: Mr President, good afternoon! My name is Valeria Pavlyuchenko; I am a representative of the First Russian ethnic TV channel.

I believe you know about our TV channel, because it was established with the support of the Presidential Council for Interethnic Relations. I would like to expand on the topic raised by our colleague from Dagestan, who spoke about ethnic and interethnic journalism.

We are a young team, let us say, a developing channel, and we report about the achievements of the regions, and interethnic stories. We would like to ask for your assistance, we really want to become information partners in the implementation of ethnic policies. Can you help us with this?

Vladimir Putin: Look, we have the Presidential Council for Interethnic Relations. I will definitely ask my colleagues to get in touch with you and find opportunities to work with you on this most important matter for our country.

I wish you all a Happy New Year. Please do not be mad at me, we really have to wrap up now. Thank you very much for your attention, and for your questions. I sincerely wish you all the best.

Thank you.

Russian Economic Resilience

November 24, 2018

by Gary Littlejohn for The Saker Blog


Western political commentaries about the condition of the Russian economy are becoming increasingly illusory, as additional economic sanctions are imposed for a series of increasingly implausible reasons, the most recent ones including those being for alleged Russian complicity in chemical weapons attacks in Syria, those supposedly for the alleged attack on Sergei and Yulia Skripal, and some more regarding Crimea. It might seem self-evident that such measures are pretty futile, given the obvious effect that earlier sanctions have had in galvanising the Russian government into action to mitigate the effects of almost any conceivable future sanctions, but that very failure might be precisely the motive for the West’s renewed sanctions. Existing sanctions have been of limited effectiveness, and Russia is now self-evidently capable of defending itself against virtually any conventional military attack. Even the US recognizes that it would face considerable difficulty in a war against Russia.

For that reason, other sanctions apparently need to be employed to probe the economy for possible other weaknesses, or at least to slow down the development of serious Russian competition in new sectors, such as civil aviation. An additional motive is probably to weaken Russia militarily prior to starting a conflict, despite the assessments above. What Professor Stephen Cohen describes as the ‘war party’ seems to harbour an insatiable hatred for Russia, and despite the problems encountered in the recent exercises such as Trident Juncture 2018, preparations seem to be taking place for a conventional conflict with Russia.

The sanctions currently in place are summarised here:

In any case, despite the evidence coming from international financial institutions and credit rating agencies that the Russian economy is growing in 2018, there are still claims from inside and outside Russia that this will not last and that Russia should somehow change course to avoid future or incipient difficulties. The most notable recent internal claim that Russia must concede defeat from Western sanctions comes from the economist Kudrin, while a well-known French economist Picketty has published a report misleadingly indicating that Russia continues to suffer from much greater wealth inequality than other industrial countries.

I remain of the view that Russia will remain resilient in the face of sanctions, but that it may well have difficulty in reaching its goal of 5 per cent growth per annum by 2024, partly for internal reasons, and partly because the world economy is facing a major near-term crisis that would have a serious impact on Russia, through no fault of its own. As an indication of the causes of what I believe is the coming global financial crisis, it is worth recalling that global debt is now 60 per cent higher than it was at the time of the last financial crisis of 2008, and that no major reforms of the Western-dominated global financial institutional structure have taken place. Moreover, the same kind of banking behaviour is becoming increasingly evident, with complex financial packages known as derivatives being based once again on dubious loans that are likely to be unpaid, or at least not repaid in full. These are so-called ‘non-performing’ loans. These clouds on the economic horizon have become darker owing to President Trump’s policy of trade wars with countries that he considers to be engaging in unfair competition with the USA. In addition, while Western economists have for some years predicted the slowing down of Chinese economic growth, and have been wrong, there is now reason to believe that the Chinese economy really is slowing down, while still growing.

If this apparent slow-down continues, it will have a negative effect on the rest of the world economy, as the second link above shows already. In addition, there is increasing evidence of poor economic performance in the EU:

Since a great deal of Russian trade is with China and the Eurozone currency area, such developments beyond Russian control could have a greater impact on Russian economic performance than sanctions. In addition, the boost to the Russian economy in 2018 from high oil prices looks vulnerable or at least unlikely to continue at the present level:

It is true that the oil price has recovered a little in the hours following the above report, but the need to cut production shows that continuing high oil prices cannot be taken for granted, and Russia has not yet decided to cut its own oil production. This has resulted in a further decline in the oil price.

Yet there is no denying that in 2018 the Russian economy has continued to grow, and this is now widely recognised by various Western credit rating agencies and international financial institutions.

The Emerging Consensus on Russian Economic Performance

The IMF has unequivocally reported that the Russian economy has grown in 2018, although it claims that some institutional factors will impede future growth. Its growth estimate for 2018 is 1.7 per cent and for 2019 it is 1.8 per cent. This implies that Russia will have difficulty in reaching its aim of 5 per cent growth per annum by 2024, as laid down in President Putin’s Address to the Nation on March 1st 2018. Nevertheless, the idea that Western sanctions are crushing the Russian economy, as some US Senators have implied, seems fanciful. This is the case even if one does not criticise the IMF for ignoring the possible changes that have already taken place in various sectors, such as agriculture, finance, civil aviation, car manufacture and big data. And indeed the official Russian figure on growth for the second quarter [Q2] of 2018 indicates that the economy is 1.8 per cent larger than it was in Q2 for 2017, so we may end up with an overall growth figure for 2018 that is slightly higher than the IMF estimate.

The main credit agencies have also publicly signed up to the narrative of continuing growth. For example, Moodys has also forecast growth along lines similar to those of the IMF. My own view is that such forecasts are unduly pessimistic, but only if one assumes that the world economy remains stable over the next few years. Thus it has been argued that the Russian financial sector has been somewhat underdeveloped, and yet the official figures from the Russian government statistical agency Rosstat show that in 2018 finance has been the fastest growing sector. In sharp contrast to the UK, where the financialisation of the economy has grown like a monster and now greatly influences economic priorities at the expense of productive investment and sound long-term growth, in Russia the finance sector until recently has been lacking in capacity to cope properly with the needs of the economic restructuring that has been taking place. One of the main reasons for this recent positive change has been the closure of around 100 banks with too high a proportion of non-performing loans, which has probably reduced the room for corruption and for capital flight, instead facilitating the focus of capital on the more productive sectors of the economy.

Nevertheless, sanctions did initially produce a recession in 2014, and it took two years to recover from that and restart growth. The loss of income over those two years has been estimated at about 6 per cent of GDP compared to the result of a steady growth rate during those two years.

It seems pretty clear that the outflow of capital from Russia which has been going on for over 25 years has been facilitated by the City of London, which has enabled the creation of anonymous companies (the names of whose directors are not publicly disclosed) that can readily be used to move funds to offshore tax havens. For example the recently discovered scandal whereby a branch of Danske Bank located in Estonia evaded oversight and acted as a conduit for the outflow of about $180 billion from CIS countries over a ten-year period has brought to light the fact that London-based anonymous companies were the main vehicle for hiding this outflow of funds. Closing such gaps by greater supervision of the activities of Russian banks should help stop this drain on the Russian economy. Yet there is still ongoing outflow of capital from Russia, which remains a potential cause for concern, and the Russian Central Bank expects sanctions to continue until at least 2021.

Unfortunately, the reduction in the outflow of funds from 2014 to 2017 has not yet led to a reverse flow of funds back into Russia to any great extent, because the Russian policy of “de-offshoreization” has had a limited impact so far, according to a recent report by Bloomberg. In addition, Russian millionaires continue to keep about 70 per cent of their assets abroad.

The ongoing (if now more limited) damage from sanctions would be more readily recuperated if so much capital was not still leaving Russia.

Yet it is important to stress that not all capital leaving Russia constitutes capital flight. As the link above says:

“According to the Central Bank, there are two main factors that make the outflow of capital grow. First off, Russian banks pay their foreign debts. Secondly, other sectors of economy invest in foreign assets. Earlier, the Central Bank reported the net outflow of $31.9 billion in January-September of 2018. Thus, as much as $10.3 billion were withdrawn from Russia in October.

It is worthy of note that Russia managed to improve its trade balance: its surplus amounted to $154.6 billion vs. $90.5 billion a year earlier. In addition, foreign exchange reserves (gold reserves) of the Central Bank of the Russian Federation have grown by $35.7 billion. The National Welfare Fund played a significant role in the trend: the reserves of the fund were growing owing to oil and gas super-profits (with the price of oil over $40 per barrel). According to the Central Bank, the outflow of capital from Russia for 2018 may reach $66 billion. This will be the largest indicator since 2014 ($152 billion), when the West imposed its first sanctions on Russia.”

In contrast to the outflow of capital, which as the Central Bank indicates can be beneficial, Russia has become more successful at attracting foreign direct investment [FDI] especially in the energy sector, despite sanctions. The most notable example of this is the flagship Yamal Liquefied Natural Gas [LNG] project in the Arctic. This was built with Russian, Chinese and French funding. In recent days, Saudi Arabia has expressed an interest in the follow-up project at Yamal, known as Arctic 2, as it tries to diversify its economy ahead of the decline in its own oil resources.

Arctic 2 will be even larger than the original project. One unexpected result of Yamal has been that Russian LNG has even occasionally found American customers.

In addition, Russia is using the present demand for oil to try to pressure some customers to use Euros rather than US dollars to buy their oil.

And whatever the fluctuations in the price of oil and gas, Russia is still using pipelines to secure greater stability in energy sales. The Nord Stream 2 pipeline has now reached the German shore and the Pride of Siberia pipeline in the Far East is also close to completion, but less publicity has been given to the fact that the Turk Stream pipeline has also now reached Turkish landfall.

Overall, the strong performance in the energy sector in generating available investment funds for other sectors, and the strengthening of the financial sector coupled with a growth of FDI should enable Russia to invest more effectively in future.

Other indicators of Russian economic performance

One Western economic appraisal recording some aspects of Russian economic performance is that of the World Economic Forum [WEF]. This indicates that Russia has improved on its competiveness index ranking, going up two places to 43rd out of 140 countries that are listed.

“…Russia’s standing was buoyed in the WEF rating this year by stable macroeconomics, a large market size, information and communications technology adoption and human capital…”

The factors that were thought to count against it were:

“Meanwhile, low transparency, innovation, limited interaction and diversity were listed as factors that hurt the Russian economy, along with weak institutions, workforce skills, lower social capital and a vulnerable financial system.”

These latter claims suggest that, to some extent at least, old prejudices are still in play. Contrary to these claims, Russia has a very low debt-to-GDP ratio, two sovereign wealth funds that have benefitted this year from the high price of oil, and a restructured and growing financial sector. Workforce skills are probably increasing with the inward migration of ethnic Russians from Ukraine, and it is clear that the reform of local government is ongoing. The IMF ‘ease of doing business’ index shows that transparency is increasing, contrary to the impression given by the WEF. Furthermore, both innovation and the diversification of the economy are clearly growing in agriculture, civil aviation, civilian space activity, car manufacture, and possibly in the future in the use of big data, as indicated in Putin’s speech of 1st March. The effects of measures to deal with many of these issues can be found on the Rosstat website:

Concentrating on innovation, and taking agriculture first, the Q2 figures self-evidently do not include the very recent results of the Russian harvest this year. This has once again (for the third year) exceeded earlier estimates, and the diversification within agriculture is clear, as well as the adoption of modern machinery where possible.

This video is less than 5 minutes long. The figures shown from 1 minute to 1 minute 30 seconds are worth noting. They show how much four agricultural sectors produced in relation to total Russian demand for these products. Even in meat production, Russia has produced 93 per cent of its own needs. For grain, it produced 170 per cent of its own needs. In sugar, the estimate was that 80 per cent of needs would be produced within Russia, whereas the actual output was 105 per cent, and in vegetable oil, the expected 80 per cent of demand being met internally turned out to be 153 per cent. The result is that Russia supplied more than half of the world’s wheat exports this year.

Russia is rapidly turning into an exporter in areas other than grain, and this growing export potential (with its geopolitical implications) has meant that a series of foreign ministers, as well as the World Health Organization, attended this exhibition. This rapidly changing agricultural performance is bound to increase overall economic growth in the coming years. One surprising new export crop is soya:

This might only be 3.9 million tonnes in a Chinese soya market of 95 million tonnes, but it will doubtless grow in future.

Note that the YouTube video above includes a statement that a possible reduction in VAT from 20 per cent to 10 per cent is envisaged for next year, which would reduce any upward pressure on prices, and there may be more funding for the existing policy of promoting certain agricultural regions. This raises the issue of how the performance of such special regions will be evaluated. For example, will the Ministry of Economic Development be involved and will there be specific measures such as the use of social accounting matrices to ‘capture’ the specific economic development in such regions? The ongoing growth in food production not only tends to reduce inflation and help the balance of payments, but also stimulates demand for agricultural machinery and relevant services. The planned increase in rural road construction should also foster growth in this sector.

Turning to another sector, the new American sanctions being imposed on Russian civil aviation are rightly seen as simply an attempt to contain Russian competition in this area, but as Ruslan Ostashko has argued, it will be technically easy to develop Russian alternatives to U.S. civil aviation electronics, given the capabilities shown in military avionics. Although the performance in flight tests of the MC-21 (a future competitor to the Boeing 737Max) is probably the precipitating cause of such sanctions, these sanctions cannot affect the use of composite materials in this civil aircraft, because no other plane has such technology and the components and materials were developed exclusively in Russia. So there is no way to prevent such a development programme by using sanctions. Similarly, on the wide body passenger jet being developed the new engines can readily be developed in Russia without relying on foreign expertise.

In car and bus production, the new Kamaz autonomous [driverless] bus was on display at the recent motor show in Moscow. No Western manufacturer has yet brought a similar vehicle to market. Doubtless the lessons learned in developing the Aurum luxury range of automobiles will soon cascade on to other car production.

With regard to big data, the use of distributed ledger recording of transactions is already well advanced in Russia, and not only in the area of cryptocurrencies. Apart from the fact that three of the largest five such companies are located in Russia, Russia has other potentially helpful ‘factor endowments’ in the area of big data. Firstly, there is the expertise in electronics that permitted Russia to develop its own microchip extremely rapidly. Doubtless the performance in this area will continue to improve. Secondly, there is the expertise in all aspects of computing which was evident to me 25 years ago when I visited the Computer Centre of the Russian Academy of Sciences [RAS], and the formerly secret nuclear city of Obninsk. For example, at the RAS I was shown a fully functional graphical user interface as good as MS Windows, but capable of running on an Intel 286 chip, whereas MS Windows (which had only just appeared in the West) required a 386 chip as a minimum. At the time, Russia lacked the financial capacity to market such a graphical user interface. In addition, a private company engaged in trade with China was using the programming language APL to construct its own database, without needing a proprietary commercial package. This would have enabled it to exceed the capacity limits of Western commercial database programmes available in those days, and the same would have been true of spreadsheets. In Obninsk, APL was also being used in nuclear safety, neural networking and statistical analysis quite separately from the macroeconomic modelling that was being done at the RAS. Thirdly, Russia could easily locate data warehouses near natural gas sources, thereby avoiding the transmission costs of the energy to run them, and (given the average cold temperatures in Russia) would incur lower costs in cooling such buildings. Electrical resistance of semiconductors generates heat, and this makes cooling of server buildings an issue for big data in some countries. Cryptocurrencies and other distributed ledger applications are pretty energy-intensive.

No need to surrender

In the light of such economic potential, it should be surprising that the well-known economist Kudrin is suggesting that Russia needs to make concessions to the West to ease the impact of sanctions.

Alexei Kudrin is Head of the Accounts Chamber and a former finance minister, so prima facie one would expect him to talk sense. Yet he considers that sanctions are the main threat to the President’s goals, as expressed in the Address to the Nation of 1st March. It should by now be clear that it would take far greater changes in the world economy, such as another financial crash, to throw the objectives for 2024 into serious jeopardy. There are positive elements in the balance of payments (oil, agriculture and arms, with civil aviation likely to be a growing sector) that will enable the Russian government to fund most of the objectives now set for 2014, in my view. The sovereign funds are increasing at the moment, and while this form of saving is a precautionary counter-measure to probable further sanctions, the fact that Russia is pretty much self-sufficient in raw materials, and has a growing skills base (with ethnic Russians coming from both Ukraine and Kazakhstan) should mean that additional sanctions will have a limited effect. There is also the likely prospect of military innovations cascading into the civilian economy, as used to happen in the USA, and this is particularly relevant for civil aviation and big data.

There is the additional problem that the West is stagnating economically and technologically, and has evident difficulty in developing new technologies, including in space. Where the West (and Far East) has had a technological lead with smart phones, the global market is showing clear signs of saturation. The same is true of social media, where stocks are declining quite steeply at the moment, and where Russia or China have rival products already in place. It is likely that the West has little to offer Russia if sanctions are lifted, given the changes that have already taken place in Russia. Sanctions are mainly about financial power and that is already ebbing away in the West. Russia on the other hand will continue to strengthen gradually owing to the growing strength and sophistication of Russian financial institutions, the policies of currency swaps to facilitate non-dollar trade, alternatives to SWIFT developed in both Russia and China, and perhaps in future more “de-offshoreization”.

The ‘failure of nerve’ shown by Kudrin indicates the pernicious effect of Western neoliberal ideology, and raises once again the issue of its influence on aspects of Russian economic policy-making. This can be seen in the case of the pension reform earlier this year, for which Kudrin had lobbied over a period of some years. Having looked again at the research report that was published in Russia just before the law was changed on the age at which people become eligible for a state pension, I am even more convinced that it was premature to introduce this legislation. The report looked at the interaction between demographic and economic changes in present-day Russia covering five aspects, and argued that to raise the age of pension eligibility would adversely affect the economy, and slow down economic growth. While this would not be the case in many industrial societies most of which have a very different demographic profile, Russia is unusual and it would have been preferable to delay the introduction of such a measure, in order to avoid the negative impact just at a time when economic growth was picking up.

There was an analogous case with South Africa at the end of Apartheid in 1994, where the political settlement that was reached included enormous pension payments to South African civil servants. An econometric and demographic analysis there showed that it would have been possible to have a ‘pension holiday’ for a few years in order to devote those funds to kick-starting the economy – a high priority at the time. It was shown that this would not really have adversely affected those pension payments, but strong vested interests prevented this temporary diversion of pension payments from taking place.

The Saker has commented on Putin’s adroit response to the political backlash that took place in mid-2018 when the new pension law was introduced during the football World Cup. The subsequent changes to the legislation may have mitigated some of the adverse effects, but the outcome will not be as good as if the legislation had been postponed for a few years to facilitate the desired acceleration of the economic growth rate.

Why Russian growth may not be constrained by the factors highlighted by the Washington Consensus.

Russia is simply running a mixed economy, with most of it privately owned and parts of it in public ownership. This was considered perfectly normal in Western Europe from 1945 until the late 1970s, and even now forms quite a large segment of economic activity in countries such as France. The advantages of such public sector activity include reaping the benefits of ‘natural monopolies’ such as railways or utilities where competition is likely to be restricted under normal market conditions. These benefits then potentially include additional state revenues, long-term time horizons for investment planning and at times greater democratic control. In the UK the fact that foreign state-owned companies now own companies that were originally privatised is an indicator of how the ‘logic’ of natural monopolies can sometimes prevail even in competitive market conditions. It is much easier to develop a realistic long-term national economic strategy if those natural monopolies are under government control.

In general, more equal societies grow more quickly, contrary to the mythology of the neoliberal Washington Consensus. It is increasingly clear that the increased inequality of income and wealth generated by the neoliberal policies of that last 38 years has acted as a drag on growth and has contributed to the economic instability that resulted in the financial crash of 2008. Russia is widely considered to be a very unequal society, but this view ignores the impact of measures to reduce such inequalities of income and wealth, especially poverty reduction measures that have had a significant impact. This now includes minimum wage legislation that appears to have been influenced by the research of Professor James K. Galbraith at the University of Austin, Texas.

The view that wealth inequality in Russia is huge has recently been given a boost from a book by the well-known French economist Thomas Piketty. However, that book has been subject to very serious critique by the Swedish economist Jon Hellevig:

Hellevig argues that under its present leadership, Russia has been moving towards a more equal society, a trend that seems to be continuing despite the glaring inequality of income and wealth. Hellevig’s point is that these glaring inequalities are not dire in terms of international comparisons.

“After identifying the deficiencies, we have adjusted the main findings announced by the Piketty scholars to reflect the actual data. Corrected data shows that instead of earning 45-50% of national income as claimed by the our Piketty scholars, the top 10% of Russians earned less than 30% of the income. Correspondingly, our corrected data shows that instead of owning more than 70% of the national wealth, the wealth of the top 10 percent of the population was 39% of private wealth and 32% of total national wealth.”

This refutation by Hellevig, which shows that the glaring inequalities are not dire in terms of international comparisons, indicates how Russian society has changed since the 1990s. The so-called ‘oligarchs’ have less weight in the economy and almost certainly less political power. It seems that the member of the Duma who stated that there are no oligarchs any more may well have been correctly pointing to the changed political landscape, even if that was probably an overstatement. The wealthy no longer seem to dominate the political agenda completely, in contrast to the 1990s. Insofar as they do have an impact on policy, it seems to be through the ongoing influence of neoliberal ideologists such as Kudrin and others in certain parts of the government.

Returning to the potentially strategic importance of the state in economic performance, the historical evidence indicates that since the 18th century state-sponsored growth has been vital for stimulating economic growth, especially for industrialisation. The famous five Asian tigers are clear examples of this during the last 40 years or so, but in fact all economies have relied initially on state-sponsored growth in the early phases of industrialisation. Even the UK relied on the dominance of the Royal Navy to support its dominant trade position and ensure that the colonies, especially India, supplied the economic surplus necessary to finance the industrial revolution. Historically, it is only the leading global economy (the UK, then the USA, then China) that advocates free trade, after it has achieved its dominance.

Russia fulfils both criteria for long-term growth, namely, it is not too unequal and has a state-sponsored growth strategy. It also has the most fundamental feature for long-term growth, namely population growth, and is now the only technologically advanced society to have this positive demographic profile. That is a result both of growing optimism about the future and of more stable families. Among ethnic Russians and some minorities this is almost certainly a result of the restored influence of Christianity.


While Russia may well struggle against growing global economic ‘headwinds’ to achieve its aim of 5 per cent growth per annum by 2024, it quite clearly has the resilience to cope with the current sanctions in place and to help shield other economies from sanctions by using currency swaps, occasional barter agreements, the use of an alternative international payments system to SWIFT and other measures. By contrast, the EU seems unable to help shield Iran against US sanctions because it does not possess an alternative to SWIFT and SWIFT itself has already caved in to US financial threats and refused to process payments going to Iran. In addition, the EU can find no member state willing to host any financial institution designed to facilitate trade between the EU and Iran in fulfilment of the nuclear deal that the US has recently withdrawn from. Apart from Russia, only China has the financial muscle and its own alternative to SWIFT to help Iran to withstand the US sanctions.

The fact that Russia is innovating in agriculture, energy production, civilian space activity, civil aviation, automobiles and intends to do so in big data (partly for greater transparency and responsiveness in government administration) shows that its prospects for economic growth remain good.



Great Recession at 10: $500k wine & jailing Black footballers for insider trading

by Ramin Mazaheri for The Saker BlogGreat Recession at 10: $500k wine & jailing Black footballers for insider trading

November 02, 2018

Ten years ago my life was all screwed up by the economic crisis I had nothing to do with.

In August 2008 AFP (Agence France Presse) said that if I learned French they’d give me a job. I moved in with my parents and studied five hours a day seven days a week for five months. By the time I arrived in France in February AFP, along with everyone else, was no longer hiring. The crisis had started in September with the bankruptcy of Lehman Brothers.

So I had wasted all that time and effort. I was in France but sans job – a big problem on multiple levels. I could translate French copy into English adequately but I immediately realised I could not understand anything the French were saying to me, nor could I say hardly anything to them. I was a jobless, isolated, unneeded immigrant with no income and questionable prospects in an overcrowded field now undergoing a second recession (the internet provided the first recession in journalism jobs).

Ten years later, I consider myself lucky: that is hardly the worst story you’ve heard caused by capitalism’s ever-guaranteed, always-exacerbated failures.

What have we learned?

Why are you asking me? Well, I better have something to say because, very fortunately (and rather undeservedly, given the many better journalists here in Paris), for most of the last decade I seem to have been one of the busiest on-the-ground English-language TV reporters in Paris.

Covering the Great Recession from Europe is, I think, far different than covering it from the United States because Europeans often insist that their democracy, economy and mindset is qualitatively different from those in America.

The Great Recession in America was just a case of bad getting worse – dilapidated infrastructure from the Depression or Eisenhower eras remaining dilapidated, widespread drug and alcohol addiction falling deeper into the rabbit hole, near-zero government assistance remaining near-zero, tons of crime devolving into tons of crime now committed by people with tattoos on their faces – i.e., no real change and no real hope for change.

But Europe – ooh la la, they have too much class for tattoos on their faces. They have long-represented the alleged “Third Way”, which gracefully sidestepped American yahoo-ism and (alleged) Soviet totalitarianism, and were recently united in the (alleged) ever-greater fraternity which was the European Union and the Euro.

So what have we learned in 10 years? Last month a former employer of mine reported on the correct price for the best bottle of wine – $558,000.

What on earth is that, besides grounds for a public near-lynching? That is asset inflation of the worst, most socially-useless type. In 2008, that same price got you 27 bottles of wine, which was then the highest price ever paid for a single lot.

This two reports perfectly describe what has been the West’s fiscal policy since the Great Recession began: using taxpayer money to inflate the assets only owned by the rich and the propertied class in order to increase only their wealth. They have spent 10 years re-creating a bubble for upper-class assets – wine is never worth $93,000 a glass any more than a bottle was worth $19,000.

In the same vein, a Leonardo da Vinci painting is not worth the $450 million Mohammad Bin Salman paid for it last year. These massive, heinous, sinful sums are not being forked over because “that is what the market will bear” – they are being paid because the ultra-rich have become ultra-richer in the last 10 years and…you gotta spend your money somewhere.

No, the rich have not let taxpayer trillions burn holes in their pocket: Our money has only re-pumped new bubbles in the primary asset classes of the 1% – luxury goods, real estate, stocks (overvalued companies) and investment funds.

I will get straight to the point: Because our trillions have gone into these wasteful investments, instead of investments which improve overall societal well-being, we are certainly WORSE OFF than ten years ago.

Not all bubbles or debt is the same, despite what German-minded minds will insist. Instead of creating bubbles or debt to do any of a million positive things – improving business efficiency through better infrastructure, inventing cheaper solutions via increased education and research & development, injecting money to circulate into the “real economy” just by giving Joe Schmoe a job to uselessly move a bag of dirt from point A to point B and back again – the lack of socialist central planning has allowed the real economy to be gutted in favor of the economy of the 1%….again.

Of course, there are other bubbles which affect more than just the 1%: Western inflation over the past 10 years has been much more impactful in sapping (my) wages than the upper class realizes, but the US housing market had no reason to have reached 11% above the July 2006 Housing Bubble peak in August 2018.

For those of us who hold no property in real estate or property in corporations (stocks), we are left out in the cold. We still are yoked to debt and can be bankrupted by bubbles, though.

But the bubbles and debt of the 99% are good and even necessary: we need houses to live in, we need our sub-prime auto loans not to lead to repossession, we need our medical bills paid for, we need our elderly care bills paid for because we simply cannot stand how loud Grandpa has the TV any longer. All of this is “good debt” which sends money into the real economy (even if you can’t hold on to it for more than one payday).

The effects of the FIRE economy – Finance, Investment & Real Estate – in the recent history of capitalism has been studied and popularized by American economist Michael Hudson, but we are about to find out AGAIN just how pernicious its influence has been.

The Lost Score: not the stash of swapped prescription medication you have misplaced

Don’t think the Eurozone is lost? The Eurozone’s GDP is 12% lower than in 2008Chinas is up 266% over the same timeframe.

Your problem must be that you believe what you read in the Western Mainstream media: China’s 6.5% growth in the 3rd quarter was “weak” to Reuters, while France’s 3rd quarter growth of just 0.4% was (per my would-be AFP colleagues) a “boost as economy rebounds”. Sure, Frenchy, sure, you’re a real star. Both those articles are from the past fortnight, but it’s the same absurd spin I’ve reported on for nearly 40 economic quarters.

Europe’s Quantitative Easing was scheduled to end September 2017, so back then I wrote a 7-part series which showed how the world’s biggest macro-economy – the Eurozone (but China is about to surpass it – remains the weak link the global economy despite the “whatever it takes” (alleged) solution of European Central Bank President Mario Draghi in 2012. What I did was combine a decade of on-the-street reporting with some basic (leftist) economic sense (FYI, all economic sense is leftist) to write about what will happen when this bubble – the “bailed out by taxpayers” bubble – finally re-bursts.

That is the biggest bubble, and it is about to pop.

Because they no doubt read and agreed with my analysis, the Eurozone’s leaders postponed the end of QE for 1 year. However, come January 1st, no more 30 billion euros in free money to high finance every month – they have been given 2.5 trillion euros in total. Again, we in the Eurozone have gotten zero from all that because the center- and right-wing forms of capitalism do not allow strings to be attached (such as delivering jobs, community betterment, etc.) in return for these fiscal gifts. CEOs, not workers, rule – the Eurozone has never been a socialist republic.

The problem is us:

This policy was not at all wanted by the Eurozone’s population…but this is a liberal democracy: that means public opinion is aggregated once every four or five years, and then the sheep must shut up and take it. That’s why it made no difference when Francois Hollande was elected on an anti-austerity platform: in classic modern liberal democracy form, he simply introduced a divisive, deflecting plan to approve gay marriage on the very same day – November 7, 2012 – that he announced his backtracking acceptance of austerity.

It is only in socialist countries where pubic opinion is actually reflected in policy making – empowering the average citizen is one of the two pillars of socialism (redistribution of wealth being the other) and what do you think “empowering” means? Hint: it is not synonymous with “ignoring”.

The Chinese Communist Party, it has been accurately written, is the world’s biggest public polling firm. There is no doubt that Cuban socialists are reflecting the People’s will when they are counting up their few unblockaded pesos and prioritising education, housing, medicine and food. North Korea is not funding nuclear research because they want to, but because all North Koreans are in agreement that they were the most-attacked, most-threatened, most-surrounded nation in the 2nd-half of the 20th century. You are totally unaware if you think the Iranian Revolution has endured similar violence and menacing by wasting their oil money on policies which the Iranian People cannot immediately and tangibly see have improved their quality of life since 1979: Iran’s economy, essentially 100% state-controlled, reflects the People’s will to a great degree (it is structurally impossible for it to reflect the will of private Iranian CEOs).

However, the West’s beloved liberal democracies do not at all care or reflect popular opinion – liberal democracies are designed to please the bourgeois/aristocratic/top 10%/technocrat/brahmin/genetically-superior/culturally-superior class. We hold these truths to be more self-evident in 2018 than 2008.

But what will happen when QE ends in the Eurozone? My prediction last year was based on capitalist logic: high finance, no longer bought off by free money (and thus less able to pay for $500k wine), will go back to doing what they did at the height of the crisis in Europe – the 2012 Sovereign Debt Crisis – and start squeezing the poorer countries of the Eurozone in the bond market. This time, Italy and Spain will be in their sights. This will soon spark the same chaos and instability as back then.

But worse: as illustrated, the Eurozone is far, far weaker than in 2012. They have spent trillions but bought $500k wine instead of productive, economy-safeguarding, preparing-for-capitalism’s-next-inevitable-rainy-day investments for the 99%. How could anybody possibly see it differently? I guess it’s the same answer to how AFP can see France’s 0.4% Q3 growth as a “boost as economy rebounds”. Keep the faith – success is right around the trickle-down corner, LOL!

You cannot tell me that the bankers have been totally bought off and will be content to roll around in their filth for the next 50 years, because they never are: there is always some young, Martin Shkreli-like, hedge fund-managing punk who wants to make his billions, and he will gladly hold Spain and Italy hostage to do so. Shkreli was not jailed for changing a pill’s price from $13.50 to $750 – that’s totally legal in capitalism – he was jailed because of his big mouth. But his usury and his rapper-like ego is simply how he was raised (in a non-socialist, non-religious Western culture). Nobody can stop him in the capitalist system – there is no central planning, there is total opposition to the idea of a “collective”, and they have even lost that longtime feeling of “positive racism” which formerly lent a sliver of unity to Western imperialist societies (“I can’t ruin my Color tribe and will do some things in their general interest because I hate your Ethnic tribe and fear that Religious tribe could be right.”).

And you can’t say that we are safer now because the criminals of 2008 have been brought to justice: look at the case of Mychal Kendricks, a 27-year old professional American football player convicted of insider trading.

Kendricks is the Black son of a crack addict, so from a socialist perspective his “class label” could not be more perfect – he succeeded despite tremendous obstacles, and he would be listened to with sympathy, targeted for public assistance and given affirmative action policies. He has admitted to insider trading and should be punished, but was the 2008 crisis orchestrated by football players, perhaps in between their concussion protocols and MRIs?

The case illustrates the priority of liberal democratic/bourgeois justice systems: Mychal Kendricks, from the bottom of the socio-economic ladder, faces prison while the 1%ers who gamed the system did much more than escape justice – they were hailed as our only saviours to financial ruin, as too important (big) to fail, and subsequently entrusted with many no-strings-attached trillions.

Corruption must be punished, but Kendricks is not the problem…..

The problem is the lack of socialist central planning, the lack of democratic input (worker empowerment) on public policy, and the lack of prioritising the bottom 90% – the top 10% is prioritised, lauded and excused, instead.

The lack of all those three things created Europe’s Lost Decade of economic growth; created a situation where little-old-me was one of the few journalists to do some basic economic math and to openly say it was a Lost Decade (but which was noticed only by a small group of powerless intelligentsia on the fringe); this lack created today’s reality where things have only gotten worse since 2008, that more crisis is coming, and that the next crisis will necessarily be even worse.

The age of European austerity can be summed up quite simply: creating such a desperate labor market that the 1% was able to roll back Europe’s better-than-average social safety net, regulations, wages and working conditions.

That’s all it was – a wilful economic depression in order to turn the the EU’s work culture (and financial culture) into that of the US. The same process happened during Japan’s Lost Score – the Eurozone is now entering part two of their Lost Score.

These truths are more self-evident in 2018 than 2008. If you haven’t learned that, you obviously remain resolutely pro-capitalism and pro-liberal democracy/West European bourgeois democracy despite ten years of proof in your face.

Socialism has changed much in 10 years – a new generation of leaders in Cuba, the possible reintegration of North Korea into global affairs, a possible rapprochement between Iran and Europe (but not the US), the increasing acceptance of “socialism with Chinese characteristics” as a reproducible and admirable model – but if capitalism has changed at all it is only for the worse.

Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. His work has appeared in various journals, magazines and websites, as well as on radio and television. He can be reached on Facebook.

How Putin Solved the Problems of Europe and the US in Passing with Merkel

How Putin Solved the Problems of Europe and the US in Passing with Merkel

Translated by Ollie Richardson and Angelina Siard
cross posted with 


Aleksandr Sergeyevich Pushkin wasn’t the first Russian poet. Before him there was ZhukovskyDerzhavin, and even Lomonosov. Beautiful, melodious verses were composed by many also after Pushkin. Nevertheless, he is “our everything”. Without him, without Pushkin’s language, not just Russian poetry, but the Russian language itself is incomplete…

Pushkin is exact and extremely laconic. He knows how to pack many meanings into only a few words. And he doesn’t use excess words. Do you remember: “Up there a prince in passing captures a fearsome tsar”. Just one word – “in passing” [two words in English – ed]. But how it characterises both people and process! Solving more important problems, in between times, a certain prince at the same time captured a fearsome (i.e., mighty, strong, dangerous) tsar (and it means he conquered him, his army, and his state).

I don’t know whether it was Peskov’s idea or it arrived by itself, but the Russian media, highlighting the visit of the president Putin to Germany, concentrated on the Austrian wedding, the Tula samovar, an ancient milkchurn, the Kuban choir, and the painting of an unknown (to us, so far) artist [all four are the gifts that Putin brought to the wedding – ed]. The meeting with Merkel and the solving of difficult global (including European) problems happened in passing. So, he went to wedding and at the same time attended to some affairs.

Meanwhile, the visit to Germany isn’t only symbolic – it is critical. For the third time in 100 years, the Reich finds itself in a condition of a rigid standoff with the same Anglo-Saxons who raised and nurtured it for the fight against Russia. Only this time the grown wiser Germany tries to keep France as an ally (instead of crushing it, like the two previous times) and isn’t eager for a Moscow campaign at all. It is rather on the contrary – it tries to reach an agreement with Russia concerning a joint standoff with Anglo-American aggression.

It is a very difficult process. It’s not only about history and “values”, but a consciousness most dear to bürgers — markets providing a multi-billion income, connecting Berlin and Washington. It is almost impossible to escape from “brotherly” embraces without suffering considerable damage. For a long time Germany didn’t even try to do this, obediently joining the sanctions regime. At first the introduction of sanctions was still shaped by more or less worthy pretexts, for example: “Russia is to blame for the fact that the West organised a coup in Ukraine, and now Ukrainians kill each other with ecstasy during civil war”. Four years have passed and sanctions are imposed even for the fact that the Brits out of fear killed the cat of the Skripals, and also for the fact that the Americans elected Trump as president, and not Clinton.

The “gloomy German genius” would reconcile even with this. Losses because of sanctions have already been incurred, and bypassing routes have been found. Those who can enter the Russian market with an exclusive offer remain there. The others calculate their losses. Russia, under the name of import substitution, radically reorganises its economy. The sector focused on national production rejoices. The sector focused on import weeps.

But here it became clear that the Americans want to take away from the Germans their “cow” – the European Union, and to milk it themselves. But Germany in exchange is granted the “honourable” right to increase military expenses fourfold and switch from Russian gas to the three times more expensive American gas.

At this moment something skipped a beat inside the Germans. It isn’t excluded that they even remembered that Hitler, in the last five years of his life, blamed Anglo-Saxon “plutocracy” (his expression) with even more bad words than the Jews and Slavs hated by him. In general it entered the bürgers’ mind that Germany has two paths: to perish once again, or to make friends with Russia and smoothly but quickly – since the time for reflections passed already five years ago – reorientate its economy from the American to the Eurasian market.

This is a very difficult and painful process, and the Germans up to the very end tried to change nothing, hoping that somehow they will come out unscathed. But they didn’t. The weakened America, in the inverse proportion, became so impudent that it tried to decide on Germany’s behalf what gas pipelines it should build and which ones “harm European security”.

If the current crisis doesn’t transform into a global catastrophic military conflict, and all the history of mankind will remain, then the future generations of historians will undoubtedly pinpoint the discussion about “Nord Stream-2” as one of the main reasons for the disintegration of NATO and the reformed European Union’s reorientation from the US towards Russia. On the eve of the Austrian wedding Putin pinpointed topics of future discussions in Berlin, as well as a discussion about global questions, including economic and security, and he also placed an accent on the question of “Nord Stream-2”. In turn, the Germans on the eve of the meeting once again stressed that “Nord Stream-2” is a solved question and that it won’t be discussed with the Americans in any form.

Actually, this is everything that should be known about this meeting. Putin flied to Berlin not to reach an agreement or to synchronise watches. In fact, agreements had been reached before the visit. It was the ways in which the American problem can be solved that was discussed in Berlin. How to appease a bull the most without there being serious consequences for the china shop. In Berlin the most general forms of technical solutions to the problem that is the post-American world were worked out. Moreover, judging by the contented faces of the participants and a minimum of information, mutual understanding was full and comprehensive.

We will be able to see the main results of this meeting over the next 12 months, and they will be expressed in the careful, but quick rapprochement between Germany and Russia, against the background of the contradictory and twitchy policy of the US. By the way, the question of recognising Crimea as Russian again arose in Washington just because the US cannot offer anything to counter this careful but quick rapprochement. And within the framework of this rapprochement, Europe will sooner or later recognise the actual status of Crimea anyway.

Putin also spoke in passing, but quite concretely about the prospects of solving this problem, as well as settling the entire Ukrainian crisis. When he was asked a question by a journalist, he answered by saying that we will also discuss Ukraine.

This “also” for Kiev is worse than Russian tanks on the Khreshchatyk. The West solves the Ukrainian problem with Russia without Ukraine among other questions. Ukraine is not only not the main subject of a meeting, it is simply one of many: about nature, about the weather, about Papuans, and at the same time about Ukraine. In the media the Ukrainian topic is far less relevant than the Austrian wedding and the Kuban Cossack choir being 10 minutes late to it.

It is not just an effective policy. It is also a beautiful performance. Putin went to a wedding, and at the same time solved European problems in a global context, and also spoke about Ukraine.

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